Steel industry workers get highest pay increase in 15 years

In February 2008, the bargaining parties of the northwestern German steel industry agreed on a new package of collective agreements. The provisions of the new agreements comprise a €200 one-off payment and a general pay increase of 5.2%, with effect from 1 March 2008. The parties also agreed to conclude a new framework agreement on pay scales by June 2009. Later in the month, the pilot agreement was also adopted for the eastern German steel industry.

On 19 February 2008, the German Metalworkers’ Union (Industriegewerkschaft Metall, IG Metall) and the employers’ association for the German steel industry (Arbeitgeberverband Stahl) agreed on a new package of collective agreements, covering some 91,000 employees in the northwestern German steel industry of North Rhine-Westphalia, Lower Saxony and Bremen. On 21 February, the agreement was also adopted for the 16,000 employees in the eastern German steel industry. The agreements were reached following a series of short warning strikes which involved some 39,000 employees in the western German steel industry and 5,000 in eastern Germany.

Provisions of new pilot agreement

The pay element of the new package of collective agreements provides for a €200 one-off payment for February 2008 and a general pay increase of 5.2%, which took effect on 1 March 2008. The pay agreement has a duration of 14 months and will run until 31 March 2009. Initially, IG Metall had demanded an 8% pay increase, while Arbeitgeberverband Stahl had offered a 3.5% pay rise, with the agreement covering a period of 16 months. Apprentices’ remunerations increase by €70 with effect from 1 February 2008; as a result, their remunerations will amount to €689 in the first year of apprenticeship, €710 in the second year, €747 in the third year and €792 in the final year – many apprenticeships in the industry go beyond a period of three and a half years. IG Metall, however, was not successful in its demand for a general reduction of working time for employees aged 50 years and over. The trade union had argued that this would have been a development of the collective agreement on ‘demographic change’, which was concluded in 2006 and runs until 31 January 2009 (DE0610019I) and which included the aim to adjust working time to the needs of older employees.

Along with these pay provisions, the parties also agreed to negotiate a new framework collective agreement for the introduction of a new grading system. This system will abolish the traditional distinction between blue- and white-collar workers, similar to the agreement which the metalworking industry concluded in 2002 (DE0205205F). Negotiations for this framework agreement should be finalised by June 2009.

Reactions to agreement

The collective bargaining outcome was accepted unanimously by the bargaining commission of IG Metall in North Rhine-Westphalia. In a press statement (in German) on 20 February 2008, the Chair of IG Metall, Berthold Huber, said that he was content with the outcome. He emphasised that the trade union had been successful because of its ability to mobilise its members. Furthermore, he considered that the agreement is a signal of strong unions being able to achieve good bargaining outcomes.

Meanwhile, the President of the Arbeitgeberverband Stahl, Helmut Koch, indicated in a press statement (in German) that the employers would have preferred a more moderate pay increase. Nonetheless, the employers had agreed to settle for the agreement as further negotiations had not looked promising and the industry did not want to run the risk of major industrial action.

Commentary

The agreed pay increase is the highest in the German steel industry for about 15 years and is well above the increase agreed in 2006. The bargaining outcome underlined the strong position of IG Metall in the industry. The industry’s economic environment was also favourable, given that even the employers did not deny the currently positive situation in the German steel industry.

The Employers’ Association for the Metal and Electrical Industry (Arbeitgeberverband der Metall- und Elektroindustrie, Gesamtmetall) already stated to the press that the bargaining outcome in the steel industry could not serve as a pattern for an agreement in the metalworking industry, where negotiations will commence in October 2008. This statement, however, is unlikely to prevent employees and trade union members in metalworking from having increased expectations towards the outcome of the forthcoming bargaining round.

Heiner Dribbusch, Institute of Economic and Social Research, WSI

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