New package of wage agreements for steel industry

In September 2010 the bargaining parties of the northwest German steel industry agreed on a new wage package, including a €150 one-off payment and a general pay increase of 3.6% with effect from 1 October. The parties also concluded a new collective agreement ensuring that temporary agency workers in the steel industry are paid the same as workers on standard contracts. This is the first such collective agreement in the history of collective bargaining in Germany.

In September 2010, the German Metalworkers’ Union (IG Metall) and the employers’ association for the German steel industry (Arbeitgeberverband Stahl) agreed a new package of collective agreements, covering some 85,000 employees in the German steel industry in the northwest federal states (Länder) of North Rhine-Westphalia, Lower Saxony and Bremen. The settlement followed two days of warning strikes involving some 17,000 steel workers.

Provisions of the settlement

The bargaining parties agreed on a €150 one-off payment for the month of September 2010 and a general pay increase of 3.6% with effect from 1 October 2010. The duration of the pay agreement is 13 months until 31 October 2011. Apprentices’ pay will also be increased by €40.

The collective agreement on ‘demographic change’ (DE0610019I), which was concluded in 2006, included provisions adjusting working time to the needs of older employees. The parties therefore agreed to set up a commission to investigate existing works agreements to see whether it is possible to generate similar collectively agreed provisions in the next pay round.

The new agreement was also the first in the history of collective bargaining in Germany in which the social partners concluded a sectoral agreement securing equal pay for some 3,000 temporary agency workers who are hired out to the steel industry. From now on these workers will receive the same pay as direct employees of the industry.

Equal pay for temporary workers

The recent bargaining round in the northwest German steel industry took place amid signs of recovery in the national economy in general and the steel industry in particular. IG Metall, which has a very strong base in the industry, had made it clear from the beginning that in contrast to the bargaining round in the metalworking sector in February 2010 (DE1004029I), which had to take account of the economic crisis, the union now considered that the situation had changed and that workers could expect to benefit from the upswing in the steel industry. In addition to the demand for a 6% wage rise, the union chose the steel industry as a pilot industry to reach the first collective agreement on equal pay for temporary agency workers. The union believed that employers in this industry were more likely to concede this provision as the wage levels of temporary workers are already similar to those of the core workforce in many cases.

Temporary agency workers are usually paid according to separate collective agreements negotiated between a joint bargaining commission of the Confederation of German Trade Unions (DGB) and employers’ associations representing temporary work agencies. Their pay levels are often below those of the core workforce. Employers in the steel industry have argued in the past that agency workers were not on their payroll and so they should not be held responsible for their pay. This argument was rejected by IG Metall, which organises some 77,000 workers in the industry. The union made it clear that it would only accept a settlement which included an agreement on temporary agency work.

The new collective agreement stipulates that employers must commit themselves to securing pay levels for agency workers that are the same as those received by workers starting a job at the company they are contracted to. If temporary agency workers are paid less, the companies will be liable to compensate them for not being paid properly. This obligation to pay compensation does not apply if the steel company can prove that it has contractually obliged the temporary work agency to secure proper pay.

Reactions to the agreement

Helmut F. Koch, President of Arbeitgeberverband Stahl, said in a statement (in German) issued on 30 September 2010 that the agreement was at the limit of what employers could afford. The agreement on temporary agency work would make legally binding what had already been practised in the industry. In an article (in German) issued on the same day by IG Metall, Oliver Burkhard, head of the union in North Rhine-Westphalia and chief union negotiator, pointed out that the union had achieved the first sectoral collective agreement which secures improved pay levels for agency workers. The settlement was heavily criticised by employers’ associations representing temporary work agencies and by the German Confederation of Employers’ Associations (BDA). However, the Federal Ministry of Labour (BMAS) welcomed the agreement.

Heiner Dribbusch, Institute of Economic and Social Research (WSI)

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