IG Metall has demanded an 8% wage increase from German employers for 3.8 million workers in the steel and electrical sectors, covering companies such as Siemens AG and Volkswagen AG.
Negotiations starting in September will be Germany's largest wage settlement and the result could be an indicator of how wages will develop across sectors. They are also closely monitored by the European Central Bank, which has begun raising interest rates.
IG Metall chief says employees are bearing the brunt of all price hikes - unlike companies that don't want to take it on themselves.
Stefan Wolf, chairman of the employers' association Gesamtmetall, denies the urgent need for a pay increase.
German inflation rose to 8.5% in July from 8.2% in June, well above expectations of 8.1%.
Appellant employers point out that companies are struggling with soaring hardware, power and gas costs, supply chain disruptions and semiconductor shortages, so ensuring their own survival should be their priority.
In June, IG Metall secured a 6.5% pay increase over 18 months, along with a €500 lump sum for steel workers. This was the biggest pay increase in 30 years.
