Germany to bury its coal industry

The threat of industrial action, and even a national stoppage similar to the miners' strike that blighted the early years of the Thatcher government in Britain, has been averted. Ms Merkel's coalition Government secured the reluctant support of unions by agreeing to direct part of the subsidies into creating jobs in the worst-hit regions of Saarland and North Rhine-Westphalia.

The scheme will not be fully implemented until 2018, and can be reviewed in 2012 in light of conditions in the European energy market.

"No miner need be scared he is about to be dumped on the street," Economics Minister Michael Glos said, revealing some of the Government's nervousness over the issue.

The miners appeared beaten yesterday, faced with the stark reality of cheaper imported coal. The cost of production in Germany is three times higher than in China or Australia.

"They seem to be deeply resigned to their fate," said Thomas Hunsteger-Petermann, Mayor of Hamm in the Ruhr coalmining belt.

"None of us can understand why domestic coal is being eliminated from our national energy mix."

A spokesman for the German Trade Union Federation said: "These closures could lead to an erosion of the labour market from which the Saarland will never recover."

Ms Merkel's decision to end coal subsidies was supported by the two main factions in her "grand coalition" Government, comprising the Chancellor's Christian Democrats and their Social Democrat partners.

Many union members feel a sense of betrayal at the way the Social Democrats, who have traditionally drawn support from mining communities, failed to defend the state subsidies for coal. The fallout from the decision is likely to weigh on the next round of pay talks, with unions demanding the Social Democrats live up to their left-wing heritage and break ranks with Ms Merkel to demand a generous inflation-busting wages settlement for 2007.

That means not surrendering ground on demands for a minimum wage. The unions want E7.5 an hour to be paid to all workers in all industries, which would entail a pay rise for about five million workers. In the EU, only Germany and Cyprus have no minimum wage, and Ms Merkel, intent on being business-friendly, has always resisted the measure.

Figures released by the German Federal Statistics Office showed last year's pay rises had been almost entirely offset by inflation. The discontent over the pit closures may thus gain a sharper edge when the next wage round begins.

The Times

From http://www.theaustralian.news.com.au/story/0,20867,21151238-2703,00.html