9/01/2013 14:50:00

RWE Faces Strikes as Wage Talks Break Down, E.ON Strike Ballot Ongoing


FRANKFURT--German power and gas utilities face the first full-scale strike action at home since the country opened up its energy market in 1998, after labor unions declared an impasse Tuesday in talks with a second company.

The two unions, Ver.di and IG BCE, said their talks with RWE AG (RWE.XE) broke down late Monday and that this could lead to walkouts by around 25,000 workers.

Earlier Monday, RWE's main German rival, E.ON.SE (EAON.XE), was awaiting the results of a strike vote by some 30,000 of its workers, also represented by Ver.di and IG BCE.

"The employers have deliberately driven the negotiations into the ground. We didn't achieve any real progress on any of the issues," said Holger Nieden, the IG BCE's chief negotiator.

Hans Peter Lafos, chief negotiator at Ver.di, said the unions would "very likely" officially declare their talks with RWE dead at a meeting next Tuesday, prompting a strike ballot like that already in process at E.ON.

The disputes highlight the growing tensions between workers and employers in the German energy industry as utilities cut costs in response to depressed demand and a steady decline in wholesale power prices across much of Europe.

German gas and power companies also are struggling to cope with the country's exit from nuclear energy, which was speeded up after a tsunami crippled Japan's Fukushima nuclear plant in March 2011. Germany closed eight of its oldest nuclear plants immediately after the disaster and plans to close the other nine by 2022.

Martin Pack, a spokesman for RWE, said the company is ready to resume talks but urged the unions to be flexible on the issue of job guarantees.

Workers are worried because both E.ON and RWE are carrying out sweeping cost-cutting programs that will mean thousands of job cuts.

RWE has said it aims to wring savings of around 1 billion euros ($1.3 billion) over the next two years, including by eliminating 10,000 jobs. The company has also indicated that there could be further cost cuts after 2014.

E.ON seeks to reduce operating costs by more than EUR2 billion after inflation through 2015. The savings program includes plans to cut 11,000 jobs.

Not all of the jobs will be in Germany because the companies do much of their business abroad.

Prior to 1998, Germany's energy market was part of the public sector, with utilities owned by state or municipal governments.


Write to Jan Hromadko at [email protected]


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(END) Dow Jones Newswires

January 29, 2013 09:50 ET (14:50 GMT)

Copyright (c) 2013 Dow Jones & Company, Inc.


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Symbols in this story

RWE AG ST O.N. 27.68 0.7% Stock price increasing
RWE AG ST O.N. 27.55 0.4% Stock price increasing
E.ON SE 13.06 0.0% Stock price unchanged
RWE AG NPV 27.67 0.3% Stock price increasing
E.ON SE NA 12.74 0.3% Stock price increasing
E.ON SE NA 12.77 0.2% Stock price increasing
E.ON AG NPV 12.74 -0.2% Stock price decreasing
RWE AG NPV 27.55 0.0% Stock price unchanged
E.ON AG NPV 12.81 0.0% Stock price increasing
E.ON SE O.N. ADR 12.75 -0.1% Stock price decreasing
RWE AG ADR/1/10 28.02 -1.5% Stock price decreasing
E.ON SE O.N. ADR 12.72 -0.1% Stock price decreasing
RWE AG ADR/1/10 27.32 -0.1% Stock price decreasing
RWE AG RWE ORD SHS 27.55 -0.2% Stock price decreasing
RWE AG RWE ORD SHS 27.56 0.2% Stock price increasing
E.ON AG E.ON N ORD SHS 12.74 -0.1% Stock price decreasing
E.ON AG E.ON N ORD SHS 12.82 -0.2% Stock price decreasing
E.ON N Ord Shs   0.0% Stock price unchanged
RWE Ord Shs   0.0% Stock price unchanged
E.ON 14.48 13.4% Stock price increasing
RWE   0.0% Stock price unchanged

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