BERLIN (Reuters) - Germany's largest industrial union, IG Metall, demanded a pay rise of 7% for almost four million workers in the country's auto, electrical and metal industries as collective bargaining talks got under way on Wednesday.

WHY IT'S IMPORTANT?

IG Metall has said it is prepared to strike alongside the talks, potentially piling more pressure on manufacturers already faced with the threat of de-industrialisation, as Europe's biggest economy struggles to remain competitive as a business location.

Employers represented in the talks include some of Germany's big-name industrial players, including Siemens, Mercedes-Benz and BMW.

BY THE NUMBERS

IG Metall is calling for a 7% wage increase for some 3.9 million workers over a 12-month period and wants an extra 170 euros per month for trainees, pointing to the higher cost of living in Europe's largest economy.

Germany's Bundesbank projects inflation to come in at 2.8% this year, down from 6.0% last year.

The BDI business association has said that around 20% of industrial value creation in Germany is under threat, listing high energy prices, labour shortages and lack of investment among the problems.

KEY QUOTE

"We are making extremely intensive preparations for a collective bargaining round, including one with industrial action," Knut Giesler, IG Metall's negotiator in North Rhine Westphalia, said.

THE RESPONSE

"The situation is serious, the collective bargaining partners must take responsibility," said Angelique Renkhoff-Muecke, chief negotiator for the Bavarian Metal and Electrical Industry Association.

WHAT'S NEXT?

Wednesday marked the first round of negotiations in a number of states. Talks in the industrial heartland of North Rhine Westphalia begin on Thursday.

Further negotiating rounds will follow.

Unions could call strikes from Oct. 29, when an agreement ruling out such action expires.