Austrian metal workers secure pay rise of more than 7%

Austrian inflation rose to 11% in October, an initial estimate from the statistics office shows. "The agreement brings strong and, above all, lasting (pay) increases," the two main trade union negotiators in the talks, Rainer Wimmer and Karl Duertscher, said on Friday.

Austrian labour and industry representatives agreed on Friday on an annual pay rise for metal workers of more than 7% on average, above the 6.3% inflation rate for the negotiating period.

The metal workers' negotiations are widely seen as a bellwether for other sectors in a country with a strong tradition of collective bargaining and annual negotiated pay increases that generally avert the threat of strikes. The deal could strengthen concerns about a wage-price spiral that would make it harder for the European Central Bank (ECB) to bring down inflation that continues to rise despite recent increases to interest rates. Austrian inflation rose to 11% in October, an initial estimate from the statistics office shows.

"The agreement brings strong and, above all, lasting (pay) increases," the two main trade union negotiators in the talks, Rainer Wimmer and Karl Duertscher, said on Friday. Negotiations started with a large gap between unions' demand for a 10.6% increase and employers' offer of 3.5% plus a one-off payment. The overnight agreement in the fourth round of talks came relatively unexpectedly as the threat of strikes loomed.

The agreed pay increase varies according to salary level and type of employment. Monthly salaries will rise by 5.4% plus a fixed amount of 75 euros, both sides said. For the lowest earners that would mean an effective pay increase of 8.9% while on average it would be 7.4%, they added.

"That is a recognition of our employees' performance," the chief negotiator for employers, Christian Knill, said in a statement. "We are thus securing their purchasing power but also taking into account the difficult economic conditions for companies."