Increases in collectively agreed wages and salaries in 1997

In 1997, collectively agreed wages and salaries rose on average by about 1.4% in west Germany and about 2.7% in east Germany, according to latest figures from the WSI research institute.

According to a recent analysis by the Institute for Economics and Social Science (Wirtschafts- und Sozialwissenschaftliches Institut, WSI), collectively agreed basic wages and salaries in western Germany rose on average by about 1.4% in 1997. Since the inflation rate was 1.8% in 1997, employees had to accept an average decrease in real wages of about 0.4 percentage points. Furthermore, the 1997 growth in wages and salaries was much below the year's "margin of distribution" (Verteilungsspielraum) of 5.2% - calculated by adding the 1.8% increase in inflation to a 3.4% increase in productivity. Collectively agreed pay increases were thus the result of a very moderate wage policy, of which the current trend of not exhausting the "margin of distribution" is seen as a continuation. (DE9709232N).

All in all, new collective agreements were concluded for more than 16.5 million west German employees in 1997. The highest pay increases were in the energy and water industry (2.5%), private transport (2%) and hotels and restaurants (2.0%). The lowest increases were in banking (1.2%), retail trade (1.1%), railways (0.9%) and public services (0.7%). There was a continuing decline in wage increases from an average 3.6% in 1995 down to 2.3% in 1996 and 1.4% in 1997. Table 1 below sets out details of pay increases in selected west German sectors, 1995-7.

Table 1: Increases in collectively agreed basic wages and salaries in western Germany, selected sectors, 1995-7
Sector 1997 1996 1995
Energy, water 2.5% 2.8% 2.8%
Private transport 2.0% 2.1% 3.5%
Hotels, restaurants 2.0% 2.5% 3.7%
Wood processing 1.9% 2.7% 3.1%
Sweets, confectionery 1.7% 2.4% 3.5%
Wholesale trade 1.7% 2.4% 3.4%
Metal working 1.6% 2.7% 5.1%
Metal trade 1.6% 2.4% 3.1%
Printing 1.6% 2.4% 2.0%
Chemicals 1.6% 2.0% 3.7%
Iron and steel 1.5% 2.8% 2.6%
All sectors 1.4% 2.3% 3.6%
Construction 1.4% 2.4% 3.5%
Textiles, clothing 1.3% 2.1% 3.7%
Banking 1.2% 1.5% 3.4%
Retail trade 1.1% 2.7% 3.3%
Railways 0.9% 1.9% 3.1%
Public services 0.7% 1.3% 3.5%

Source: WSI Collective Agreement Archive 1998.

In eastern Germany collectively agreed basic wages and salaries rose on average by about 2.7% in 1997, compared with 5.0% in 1996. East German average basic wages and salaries have reached about 89.2% of the western levels. However, since eastern Germany has lower annual bonus payments and longer working hours, the actual income gap between eastern and western Germany is wider. Altogether, new collective agreements were concluded for more than 16.5 million east German employees in 1997. The range of pay increases was between 1.0% in public services and 5.4% in banking and insurance. Table 2 below sets out details of pay increases in selected east German sectors in 1997.

Table 2: Increases in collectively agreed basic wages and salaries in eastern Germany, selected sectors, 1997
Sector Increase
Banking, insurance 5.4%
Investment goods 5.2%
Raw material 4.0%
Food industry 3.8%
Consumption goods 3.5%
Construction 3.4%
Private transport 3.3%
All sectors 2.7%
Retail and wholesale trade 2.7%
Energy, water, mining 2.5%
Horticulture, agriculture, forestry 2.3%
Private services 1.9%
Public services 1.0%

Source: WSI Collective Agreement Archive 1998.

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