German Wage Deal A Defeat, Says CEO

The CEO of German rail operator Deutsche Bahn (DB) says jobs will be cut and millions of euros absorbed in extra costs due to a provisional wage deal agreement with the GDL train drivers' union.

The 11 percent increase, announced yesterday, will lead to higher ticket prices and put some DB sites at risk, Hartmut Mehdorn announced in a speech.

Medhorn estimates the overall cost of the GDL deal and its knock-on effect for other larger unions at the company to be more than €1bn, which will be offset over the next five years.

Medhorn describes the wage deal as a "defeat", not only for DB but also for Germany as a place to do business.

The new deal will raise wages by 11 percent, agree a one-off payment of €800 and reduce rail drivers' shifts by one hour after February 2009.

Economists have warned that the GDL deal could embolden unions in other sectors of the economy to push for more lucrative salary increases, writes Reuters.

By staff writer