Pay increase of 3.6% agreed in metalworking industry

At the end of October 2007, the social partners in the trend-setting metalworking industry concluded this year’s follow-up collective agreement covering about 164,000 employees. The agreement provides for an increase of minimum and actual wages of 3.6% and 3.5%, respectively, as well as an additional one-off payment of up to €200, depending on profitability at individual company level. The parties involved are satisfied with the bargaining outcome.

On 30 October 2007, the two sectoral trade unions and the branch subunits of the Austrian Federal Economic Chamber (Wirtschaftskammer Österreich, WKO) signed a follow-up collective agreement covering about 164,000 metalworking employees. The two trade unions involved were the Union of Salaried Employees, Printing Workers and Journalists (Gewerkschaft der Privatangestellten, Druck, Journalismus, Papier, GPA-DJP) and the Metalworking, Textiles and Food-Processing Union (Gewerkschaft Metall, Textil, Nahrung, GMTN). The compromise reached between the social partners was a result of three intensive negotiation rounds, the last of which continued for 17 hours.

The metalworking industry traditionally opens the Austrian autumn bargaining round and sets the tone for subsequent negotiations in other sectors and branches of the economy. This system of strongly coordinated pay and incomes policy ensures that macroeconomic objectives, such as price stability and maintaining international competitiveness, can be observed (AT0606019I).

Content of agreement

The new agreement is based on Austria’s traditional ‘wage formula’, which means that pay is calculated on the basis of two main parameters: the prospective national inflation rate and productivity of the current and next year. As in the previous year, the agreement also contains a flexible wage element, the extent of which allegedly proved the core point of controversy in this year’s negotiation process. The new settlement stipulates the following provisions.

  • Minimum and actual wages or salaries will increase by 3.6% and 3.5%, respectively, as of 1 November 2007. In nominal terms, this represents the highest increase since the mid 1990s. This outcome mirrors the continuing favourable economic situation of the sector and the country’s overall economy. On the other hand, it is partially compensated by a currently relatively high inflation rate, which is expected to amount to slightly more than 2% in 2007 and to rise further in 2008. Thus, the increase in real wages achieved in 2007–2008 will amount to between 1% and 1.5%, which is slightly higher compared with previous years (AT0611019I).
  • Like the previous year, a form of ‘distribution option’ has been concluded, in that 0.3% of the actual wage increase may be distributed flexibly by the employer among certain employee groups; a works agreement on this issue should be reached at individual company level. Notably, an average actual wage increase of 3.5% and a minimum pay increase of 3.2% for the individual employee have then to be observed.
  • A flexible wage element, introduced in 2006, has been renewed and doubled in volume. Accordingly, an extra one-off payment of €200 is to be paid in March 2008. However, this amount is payable only for those companies that have yielded a certain percentage in profit relative to their turnover. Companies with lower profit have to pay €150, while those recording no profit at all need not make any extra payment.
  • Any additional allowances will increase by 3.6%.
  • With regard to qualitative bargaining aspects, the new collective agreement meets the employees’ demand for one week of paid training leave for preparation purposes ahead of examinations.

Positive response despite employer concerns

The parties involved, as well as government representatives, were satisfied with the bargaining outcome. Interestingly, both the President of WKO, Christoph Leitl, and trade union representatives have emphasised the importance of securing the employees’ purchasing power, in particular in periods of economic upswing. The relatively high pay increase provided by the metalworking collective agreement has encouraged other trade unions which are involved in subsequent negotiations in other sectors of the economy to intensify their demands.

This move is in line with a statement from a representative of the Austrian Institute of Economic Research (Österreichisches Institut für Wirtschaftsforschung, WIFO), Alois Guger, who supports the trade unions’ demands to correct the current trend of a continuing dropping wage ratio. Only the Federation of Austrian Industry (Industriellenvereinigung, IV) was critical of the agreement reached, arguing that the agreed pay increases would cause a long-lasting burden for many metalworking companies and act as a misleading signal for other sectors and branches of the economy.

Georg Adam, Department of Industrial Sociology, University of Vienna

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