Rail operator Deutsche Bahn AG agreed in return not to impose any strike-related punishments, the labor court in Nuremberg said.

The court earlier this week issued an injunction blocking plans by the drivers' union, GDL, to target freight trains for a walkout on Thursday.

It also prevented strikes against long-distance passenger services, and the union appealed against that ruling. Friday's agreement between the two sides followed a four-hour court session.

GDL drivers on Thursday staged a two-hour strike against the Berlin and Hamburg commuter networks — the only parts of the railway system that were not covered by injunctions preventing walkouts.

The union and Deutsche Bahn later Thursday agreed to call in two veteran conservative politicians as mediators. GDL then said it would call off further walkouts, but it did not say on Thursday how long that commitment was valid.

GDL is seeking a pay increase of up to 31 percent for its members, and has rejected a 4.5 percent raise that railway operator Deutsche Bahn AG agreed to last month in talks with two other unions representing rail employees. The union wants a separate agreement for drivers, or engineers, a demand the railway rejects.

GDL says the drivers currently earn about €1,500 (US$2,050) per month after taxes, an amount it calls inadequate. It and other unions also have pointed to healthy earnings at Deutsche Bahn, which is preparing for partial privatization next year.

See also:

German train strike threat lifted

BBC News: 10 August 2007

The two sides in Germany's rail dispute are set to restart talks after unions ruled out further strike action until the end of August at the earliest.

Some drivers briefly walked off the job on Thursday. The two sides seem far apart.

The GDL union agreed to respect a court ruling banning more stoppages until 27 August to help facilitate a settlement.

Drivers at state operator Deutsche Bahn staged brief walkouts in Berlin and Hamburg on Thursday over a pay dispute.

Deutsche Bahn obtained an injunction preventing drivers of freight and long-distance trains from striking.

Mediation efforts

The injunction, lasting until 30 September, was granted because of the potential economic damage that a prolonged strike could cause.

The union appealed against the legal judgement and a Nuremberg court on Friday approved a compromise date of 27 August before which any strike action would be illegal.

"The decision to hold off on the strike is an important signal to the German economy" - Norbert Bensel, Deutsche Bahn

Two senior politicians from the ruling Christian Democrat Party have been appointed to head efforts to mediate a deal.

GDL is seeking a 31% pay rise for its members, arguing that they should benefit more from the recovery of the German economy.

This improvement has boosted freight and passenger traffic.

Deutsche Bahn has already agreed a much smaller deal with two other unions which will see workers receive a 4.5% rise in wages.

Deutsche Bahn welcomed the fact there would be no disruption in the immediate future.

"The decision to hold off on the strike is an important signal to the German economy and allows users of the rail network to plan their trips," said Norbert Bensel, the company's head of transport and logistics.

See also

German rail conflict shows rebel unions' power

Financial Times: Aug. 13, 2007
By Bertrand Benoit in Berlin

The prospect of Germany's first all-out rail strike may have faded but the boldness of a rebel union's challenge to the management of the state-owned operator Deutsche Bahn has underlined the rise of the country's militant splinter unions.

The rise of GDL, the engine drivers' union, which represents only 6 per cent of Deutsche Bahn's employees and yet threatened Germany's most bitter labour conflict in years, is part of the broader trend towards more decentralised wage negotiations in the country.

For decades, Germany's trade unions, set up after the war along industry lines, have sat down with the relevant business federations at regular, highly scripted gatherings to hammer out deals that set pay and working conditions for entire sectors of the economy.
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But since 1996, the number of employees covered by these "blanket tariff agreements" has sunk rapidly. Statistics from the Federal Labour Agency's research institute show only 34 per cent of all companies and 56 per cent of workers are now subject to such deals. While companies have been leaving the business federations in droves in order to negotiate deals with their own works councils, trade unions have seen their membership steadily eroded.

Partly in reaction, unions have changed tactics, accepting low or no wage increases in return for job guarantees. Escape clauses giving individual businesses some latitude to diverge from the headline agreements also became standard in blanket wage deals.

The result was 10 years of real income stagnation. For economists, wage moderation was key to the radical restructuring German companies undertook in the period to recoup the competitiveness lost in earlier decades. But it caused frustration among workers and it is now boiling over as the economy powers ahead.

"We have a situation where despite strong unions, wage agreements are no longer working," says Gerhard Bosch, trade union expert at the Institute for Labour and Technology. "Groupings that represent special interests are aware of this, they observe the trend towards decentralisation and see a chance to challenge this wage stagnation."

Smaller and more militant unions, such as Cockpit, which represents 8,200 airline pilots and is now striking for a 6 per cent pay rise at LTU airline, are the main beneficiaries.

Seen in this light, the support the free-market Free Democrat party offered last week to GDL's eye-popping demands makes sense. The FDP sees rebel unions as a weapon against blanket wage agreements and the Tarifeinheit, a legal principle which states that different wage agreements cannot co-exist within one company.

It also explains the lukewarm, occasionally hostile, reaction of mainstream trade unions, whose power lies in their ability to dictate pay for large parts of the economy.

Some people close to business, however, warn against encouraging a trend that could backfire. "The problem with splinter unions is that they represent those workers with the highest potential to inflict damages by striking," says Thomas Ubber, the partner at Lovells LLP law firm who represents DB.

The result, he says, will be not just a widening of Germany's flat pay structure – the difference between a company's lowest and highest earners – but "a situation as in pre-Thatcher Britain, when unions in the same companies competed against each other for the most ridiculous demands".