Game of chicken

13 October 2004 By Marianne Brun-Rovet

But since Karstadt has already made a small concession, the pressure is now on the unions to back down. Both sides stand to lose if the struggling German retailer doesn t succeed in cutting costs.

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KarstadtQuelle and its unions on Tuesday were still far from an agreement on the struggling retailer's restructuring plan.

Karstadt, which runs departments stores and a mail order business, plans to sell 77 smaller stores, close its specialty shops, spin off its real estate portfolio, sell its fitness centres and exit its joint venture with coffee chain Starbucks. The turnaround would affect 9,800 staff – although the redundancy figure will depend on union concessions.

Christoph Achenbach, Karstadt's chief executive, told newspaper Frankfurter Allgemeine Zeitung that an agreement was needed by Thursday in order to have time to push through a capital increase this year necessary for the company's banks to extend its credit agreement in December.

Karstadt said its 100,000 workers would need to take pay cuts and make other concessions to save jobs. Even if workers agreed to pay cuts, the possibility of job cuts remained, it added. Verdi has opposed pay and job cuts but indicated it recognised the need for cost savings.

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