1907 (from 1903 as a French word in English), "malicious damaging or destruction of an employer's property by workmen," from French sabotage, from saboter "to sabotage, bungle," literally "walk noisily," from sabot "wooden shoe" (see sabaton).
In English, "malicious mischief" would appear to be the nearest explicit definition of "sabotage," which is so much more expressive as to be likely of adoption into all languages spoken by nations suffering from this new force in industry and morals. Sabotage has a flavor which is unmistakable even to persons knowing little slang and no French .... [Century Magazine, November 1910]
In French, and at first in English, the sense of "deliberately and maliciously destroying property" was in reference to labor disputes, but the oft-repeated story (as old as the record of the word in English) that the modern meaning derives from strikers' supposed tactic of throwing shoes into machinery is not supported by the etymology. Likely it was not meant as a literal image; the word was used in French in a variety of "bungling" senses, such as "to play a piece of music badly."
This, too, was the explanation given in some early usages:
SABOTAGE [chapter heading] The title we have prefixed seems to mean "scamping work." It is a device which, we are told, has been adopted by certain French workpeople as a substitute for striking. The workman, in other words, purposes to remain on and to do his work badly, so as to annoy his employer's customers and cause loss to his employer. [The Liberty Review, January 1907]
You may believe that sabotage is murder, and so forth, but it is not so at all. Sabotage means giving back to the bosses what they give to us. Sabotage consists in going slow with the process of production when the bosses go slow with the same process in regard to wages. [Arturo M. Giovannitti, quoted in report of the Sagamore Sociological Conference, June 1907]
The military extension to damage inflicted (especially clandestinely) to disrupt an enemy is from World War I.