Employees are angry that their real income has shrunk over the last four years while company profits have risen. For example, steel company Thyssen-Krupp posted the highest profits in its history last year -- some 3.3 billion euros, before taxes. Its employees, however, enjoyed an average wage increase of just 3.8%. We take a closer look at how Thyssen-Krupp rewards its managers and its steel workers.

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The workers can't do without their sausages. A warning strike on an empty stomach. impossible in the German steel industry. Around one thousand steel workers have walked off the job and gathered outside ThyssenKrupp in Bochum. They are demanding an 8 percent pay raise, and an extra 100 euros for the trainees.

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Guido Kunze is fed up. He's been working for the steel company for 24 years, and takes home 1,900 euros per month after tax. That's hardly a small fortune when you have a wife and 3 children: "We have to cut back on spending, on groceries and holidays. And we also have to put money aside for Christmas presents, birthdays and so on. We're having to watch every single euro, every last cent", Kunze says.

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Many of his collegaues have the same problems. One steelworker says: "Prices are going up every day. Value added tax has gone up. I think the 8 percent raise we're asking for is totally justified. Another adds: "If our pay had gone up as much as the managers' salaries, then we'd all be happy. They've made billion-euro profits, so they could give a bit more to us and not just take, take, take."

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The powerful metal workers' trade union didn't have a hard time mobilising the workers for this industrial dispute. Everyone wants a piece of the pie - and as big a one as possible. Oliver Burkhardt is head of the metal workers' trade union in this district. He shouts: "It's high time the steel workers had more money in their pockets. We need more, that's our motto - we need more ...and right now, colleagues!"

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At the moment, Thyssen Krupp is doing better than ever. Profits have risen steadily over the past 5 years. In the past financial year alone, the company earned over 2.2 billion euros. And experts say the profits will keep on rolling in. Management is currently earning 20 percent more than last year.

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Helmut Koch is not denying that. He's the employer's chief negotiator. But he doesn't want to discuss management salaries. He's been dealing with the unions for years, and knows their arguements. Up until now he hasn't made them an offer, and he's turned down their demands completely. Koch says: "We have to be careful not to endanger our competitiveness, which we worked hard for. We shouldn't undermine it with excessive demands or excessive concessions on wages or salaries. "Do you think the 8 percent is excessive", we ask. Helmut Koch: "We think 8 percent is definitely excessive. It would damage competitiveness, and in the medium-to-long term it would also damage jobs.

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Back to ThyssenKrupp. The workers' council is discussing how to follow up the warning strike. Everyone agrees the protest outside the factory was a success. So now they're preparing for an indefinite strike. Herbert Kastner says: "Workers' councils and local union representatives are now being given training, so if no agreement is reached by the 19th of February we'll be ready for a strike". The last major steel workers' strike was almost 30 years ago. This year, the unions are preparing for another battle.

Klaus Deutsch: No, there's a difference between inflation that you feel and inflation that you can measure and in terms of real purchasing power, there has been a slight increase in the last year and we will probably see a bigger increase this year.+++

Klaus Deutsch: Well they are a little bit ahead of the curve, but they will certainly settle for a substanitial wage increase, which in turn will also increase the ability of people to buy things.

Klaus Deutsch: Yes, for five or six years we have seen all kinds of economic developments that have strengthened exports and investments and now we see developments that strenthen private consumption and consumer spending, which is good because it rebalances economic growth at a time of US financial and economic crisis.

Klaus Deutsch: It might have been the fact that Christmas expectations for spending in the US were sort of bad, and now for the New Year, the managers who make sure stuff is on the shelves in US shops are slightly more optimistic and we have seen the German industries are still optimistic. They get a lot of orders from the Middle East and the Gulf REgion and East Asia, Eastern Europe, so it's not as bad as it looks.

Klaus Deutsch: Well we'll probably see, until summer, a series of weak data. I would expect the Index to decline until summer. But maybe due to the sharp decrease of the interest rate by the Febrauary Reserve Board and due to the spending package the US congress put together recently. The worst might be over by summer this year, and maybe the US will get a steam again next Autumn, and the world can be relieved again.

Interview: Brent Goff

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