BERLIN - The latest spate of strikes by German train drivers made life difficult for Bentheimer Eisenbahn AG, a 129-year-old freight and logistics company that lost 10% of its sales in January and worries it may lose important clients.

The drivers' strike, one of the longest in their union's history, is part of a wave of industrial action inflicting pain on an already vulnerable economy and sparking calls to reform Germany's prized industrial model for worker relations.

The latest walkout saw Lufthansa ground staff go on strike on Wednesday, disrupting major hubs such as Frankfurt.

While Germany still loses a fraction of its working days to strikes compared to some of its peers, the number is rising, and scenes of snarled roads, empty airports and millions of passengers stranded have blemished its image.

"It's a toxic cocktail that's brewing ... Everything comes together: poor quality, poor infrastructure, then the strikes on top of that. The system can't cope with that," said Joachim Berends, Bentheimer Eisenbahn's CEO.

"And the employees ... are sawing at the branch they themselves are sitting on if they overdo it," he told Reuters.

Germany's labour market has tightened further in recent years as the post-World War Two generation of workers retires and the population ages, giving greater leverage to unions in their negotiations.

Unions are pressing for higher wages and improved working conditions to help workers cope with a cost-of-living crisis in which inflation has climbed as high as 8.8% and real wages have dropped for three years in a row since 2020.

The German economy, Europe's largest, has a proud union tradition stretching back into the 19th century and relies on a collective-bargaining model that is meant to prevent strife.

The German train drivers' union, for example, was founded in 1867. Only a trade union is allowed to organise a strike in Germany; political strikes, such as those against pension policy in France last year, are banned.

In Germany, an average of 17.8 working days per 1,000 employees were lost due to strikes between 2020 and 2022.

This compares to 37.3 in Spain, 79.1 in France and 88.9 in Britain, the latter having seen a large jump in industrial action for example by doctors, railway, bus and metro workers, according to the European Trade Union Institute.

However, Germany's number has also been on the rise since the start of this century, from 12.6 in 2000 to 2009, to 17.3 in 2010 to 2019.

"The increasing number of strikes in Germany is having an increasingly negative impact on the entire economy," Marcel Fratzscher, president of the German Institute for Economic Research, was quoted as saying by the Tagesspiegel newspaper.

"We will have to prepare for frequent strikes in the coming years," he said. "Also because we are seeing a shift in power in the labour market, away from an employers' market and towards an employees' market."

A study by the German economic institute IW Koeln showed that negotiations in 20 selected sectors escalated to an unprecedented extent last year.

"We have an increasing trend in recent years regarding the strike level, but it's an increasing trend on a low level," said Enzo Weber, of the Institute for Employment Research (IAB).

 

STRAINING NERVES

The strikes have fanned a general sense of unrest in Germany and unhappiness with Social Democratic Chancellor Olaf Scholz's coalition government, whose poll ratings have sagged.

Besides striking workers, farmers protesting against subsidy cuts used their tractors to block roads, dumped manure on the streets and tried to storm a ferry carrying Economy Minister Robert Habeck.

The walkouts are starting to take a toll on an economy that is verging on recession.

A one-day nationwide rail strike costs around 100 million euros ($107 million) a day in economic output, according to Michael Groemling, head of economic affairs at IW Koeln.

Commerzbank chief economist Joerg Kraemer estimated that the strike would reduce value creation in the transport sector by 30 million euros per day, which corresponds to 0.3% of daily gross domestic product.

"In addition, the rail strike is straining the nerves of the public and scratching the already tarnished image of Germany as a business location," Kraemer said.

Despite the tightening labour market, the latest strikes sparked calls for reform by some frustrated business leaders and politicians, including legally forcing workers to accept third-party arbitration if industrial disputes are not resolved.

Steffen Kampeter from the Confederation of German Employers' Associations criticised the union Verdi for what the group sees as a rush into strike action this week at Lufthansa.

"Verdi's unacceptable approach underlines: We need arbitration rules, we need cooling-off phases in industrial disputes," he said.

A survey by the polling institute YouGov also showed that 59% of the Germans rejected the train drivers strike in January.

Bentheimer Eisenbahn's CEO feels unions have a wider responsibility to society, and that the most recent strikes have been over the top and could cost the industry customers and jobs.

For his company, the strike by Deutsche Bahn's freight service DB Cargo and Germany's strained infrastructure is making customers want to ditch rail transport.

Berends mentioned vehicle manufacturers like Swedish truck maker Scania, a division of Traton, that require a punctuality rate of 90%.

"If you're below that you don't get the contracts." ($1 = 0.9318 euros)

(Reporting by Maria Martinez, Matthias Williams, Christoph Steitz, Holger Hansen; editing by Mark Heinrich)