By Brian Rohan

BERLIN, Aug 27 (Reuters) - German trade union IG Metall on
Friday demanded an inflation-busting 6 percent pay hike for some
85,000 steelworkers, pressing to share in the spoils of surging
economic growth.

The steel employers group immediately rejected the demand,
which coincided with data showing Germany's annual inflation
rate held steady at 1.0 percent this month. [ID:nBAF004227]

The IG Metall pay award could set a benchmark for other
industries, North Rhine-Westphalia IG Metall leader Oliver
Burkhard said last week.

"All employees must profit from the economic recovery," he
said on Friday in a statement.

Demand for German steel plunged last year the country's
economy suffered its biggest post-war recession, but Germany has
bounced back. The German steel federation has said crude steel
output rose by 59 percent on the year in the first seven months
of 2010.

However, the largest and best positioned sectors in German
industry have largely concluded negotiations through next year,
so sudden pay rises for most of Germany's workers are not
immediately in the cards.

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For a factbox on wage deals and disputes in 2010, click on
[ID:nnLDE67A1TD]
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The German economy, Europe's largest, grew 2.2 percent on
the quarter, its fastest rate in 20 years in the April to June
period, leaving behind peers who risk falling back into
recession.

The demands from steel workers could increase price pressure
further down the line, though German core inflation remains
benign for now.

NEW DEAL

The steelworkers' existing wage agreement expires at the end
of this month and negotiations on a new deal formally start on
Sept. 6.

IG Metall demanded 4.5 percent last year, then settled for
an increase of 2.0 percent plus a one-off payment of 350 euros.

On Wednesday, IG Metal's Burkhard told Reuters that
Germany's surging economic recovery had emboldened unions to
push for substantial pay rises in this year's negotiations.
[ID:nLDE67O109]

German workers largely held back on demands for pay rises
over the past year in an effort to protect jobs during the
recession. But that is changing now the economy is recovering.

Engineering sector unions agreed a two-year pay deal in
February comprising a one-off payment of 320 euros followed by a
fixed 2.7 percent wage rise from April 2011 for some 3.5
million) employees [ID:nLDE61H0RL]

But chemicals sector union IG BCE is checking whether it
could end an 11-month wage deal signed in February ahead of time
in order to negotiate a wage rise for some 560,000 workers.

Germany's economic strength has been reflected in the
performance of its leading businesses. Of the 30 companies in
the blue-chip DAX index, 23 beat market expectations with their
earnings in the quarter to end-June and 12 hiked their outlooks.

Steelmaker ThyssenKrupp <TKAG.DE> raised its outlook for
this year after its third-quarter earnings beat estimates on the
back of robust demand from the automotive and engineering
sectors. [ID:nLDE6791YR]

(Writing by Brian Rohan and Annika Breidthardt; Editing by
Toby Chopra)