Representatives of workers and employers in Austria have agreed on an annual increase in wages in the steel industry by an average of more than 7%.

The metalworkers’ bargaining is seen by many as a compass for other industries in a country with a long tradition of collective bargaining and wage increases through yearly negotiations that usually avert the threat of a strike.

The deal could heighten worries about a wage-price spiral that could make it harder for the European Central Bank (ECB) to curb inflation, which continues to rise despite the recent hike in interest rates. Inflation in Austria rose to 11% in October, according to preliminary estimates from the statistical office.

Many see them as a compass for other industries in a country with a long tradition of collective bargaining.

“The agreement provides for a significant increase (of wages) and, above all, of its duration,” the two main negotiators from the workers, Rainer Wimmer and Karl Dürcher, said today.

Negotiations began with a wide gap between the 10.6% raise request and the employers’ offer of 3.5% plus a lump sum. The deal, reached overnight in the fourth round of negotiations, was relatively unexpected amid the threat of strikes.

“This is a recognition of the achievements of our employees,” chief employer negotiator Christian Neal said in a statement. “This is how we ensure their purchasing power, given the difficult economic conditions for companies.”