Merkel intervenes as record German rail strike hits economy

By Noah Barkin

BERLIN (Reuters) – In a rare intervention in an ongoing wage dispute, Chancellor Angela Merkel urged state railway Deutsche Bahn and striking train drivers to put an end to a long-running conflict that industry has denounced as “poison” for the German economy.

A record-setting seven-day strike by the GDL union of train drivers began on Monday, the eighth in a series of walkouts over pay and working conditions, threatening commuter chaos and disruption to vital supply chains.

Germany’s DIHK Chambers of Commerce and Industry estimated the latest strike, the longest in the history of the railway, could cost the economy half a billion euros ($556.70 million).

“Striking is a right in Germany. Nevertheless I believe that these strikes are creating a serious burden for many people and many companies,” Merkel said at a news conference with the visiting Czech prime minister.

“Therefore everything must be done to find a solution,” she added, urging both sides to pursue mediation.

It was the first time Merkel had intervened in the conflict since it began nearly one year ago.

GDL is seeking a 5 percent pay rise, a reduction in the workweek to 37 from 39 hours, and the right to negotiate on behalf of other rail employees, including train stewards.

Union chief Claus Weselsky has rejected calls from Deutsche Bahn and German politicians for mediation of the dispute.

The latest strike started at 1300 GMT (9.00 a.m. EDT) on Monday for freight trains and will be extended to passenger trains from Tuesday. The stoppages are set to continue until 0700 GMT (3.00 a.m. EDT) on Sunday morning.

“This is a slap in the face of our clients,” said Ulrich Weber, head of personnel at Deutsche Bahn, which carries roughly 5.5 million passengers and about a fifth of Germany’s freight — or more than 620,000 tonnes — per day.

Economists at bank Unicredit forecast the strike could knock 0.1 percentage points off German gross domestic product (GDP) in the second quarter of 2015.

“Warehouses will empty out, production will stutter, production may even come to a halt,” said Eric Schweitzer, president of the DIHK.

Dieter Schweer of the Federation of German Industry (BDI) called the wave of strikes “poison” for Germany.

German chemicals, steel and car companies are among those most affected by the strike. Around 200,000 tonnes of steel products are transported by rail each day, the German steel federation said.

ThyssenKrupp <TKAG.DE>, which transports most of its products via rail and ship, said it was looking at alternatives but that its options were limited.

Deutsche Bahn said the strike would cost it 3 million euros a day in lost revenue, but that it was too soon to put a figure on the total cost to the company.

The strike might prove a boon for car hire companies, long-distance bus firms and airlines like Lufthansa <LHAG.DE>, which is trying to resolve its own wage dispute with pilots.

(Writing by Noah Barkin; Editing by Caroline Copley and Crispian Balmer)

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