Social partners in steel industry agree jobs for apprentices after training

In November 2011, the bargaining parties of the northwestern German steel industry agreed on a new package of collective agreements. The new agreement allows for a general pay increase of 3.8%, with effect from 1 December 2011. The parties also agreed on permanent employment contracts for apprentices upon completion of their training. For the semi-retired, employers will top up their pension fund contributions to the same level as if they were working full time.

On 22 November 2011, the German Metalworkers’ Union (IG Metall) and the employers’ association for the German steel industry (Arbeitgeberverband Stahl) agreed on a new package of collective agreements covering some 75,000 employees in the northwestern German steel industry of North-Rhine Westphalia, Lower Saxony, Bremen and Dillingen in Hesse. The settlement followed several days of warning strikes involving more than 17,000 steel workers.

Provisions of the settlement

Following a so-called ‘zero-month’ with no pay increase (November), the bargaining parties agreed on a general pay increase of 3.8% with effect from 1 December 2011, for 16 months until 28 February 2013. The remuneration of apprentices will also rise by 3.8%, bringing their monthly pay to €775 in the first year of training, as shown in Table 1.

Table 1: Apprentice pay scale as of 1 December 2011

Year

Monthly pay

1st year of apprenticeship

€775

2nd year of apprenticeship

€795

3rd year of apprenticeship

€835

4th year of apprenticeship

€885

Source: IG Metall

The bargaining parties also agreed that employers must provide apprentices with a permanent employment contract upon completion of training. Exceptions to this are only allowed under defined circumstances. In the case of gross misconduct the works council has to be informed.

Further exceptions are possible if the company is in serious difficulty and not able to take on additional employees, or if the parties at company level agreed prior to the apprenticeship that the company offers training opportunities beyond its own foreseeable demand. In either of these situations, an employer's refusal to permanently employ a former apprentice also requires the consent of the works council. If employer and council cannot agree, the case can be taken to an arbitration committee for a final decision. An employer's obligation to employ a former apprentice can, however, also be fulfilled by the offer of a job at another workplace or company, as long as the apprentice consents.

The collective agreement on part-time retirement was amended, obliging employers to top up the statutory pension contributions of partial retirees to the level payable if the worker was receiving 100% of the full-time wage. This means that employees who switch from full-time to part-time work prior to retirement will not suffer cuts to their later pensions. Under the old agreement, employers topped up contributions to 95% of the full-time wage.

The collective agreement on ‘demographic change’, which was concluded in 2006 (DE0610019I) and which included the aim of adjusting working time to the needs of older employees, was extended until 28 February 2013. The parties further agreed to set up a joint commission to explore new ways of accommodating the earlier retirement of employees.

Background

The bargaining round in the northwest German steel industry was influenced by the good performance of the steel industry on the one hand and its uncertain prospects with regard to the current financial crisis on the other.

With the provisions on permanent job offers for apprentices, IG Metall achieved a breakthrough in what it considers to be a major concern – not least for its younger members. In recent years many employers had switched from offering permanent job contracts to apprentices to fixed-term contracts only. IG Metall therefore embarked on a major national campaign to lobby for permanent employment of apprentices upon completion of their training. The steel industry was chosen again as a pilot industry following a prior landmark agreement concluded in 2010 on equal pay standards for temporary agency workers (DE1010019I).

Reactions to the agreement

Helmut F. Koch, President of Arbeitgeberverband Stahl, said in a press release (in German) that the pay rise was only acceptable because of the comparatively long duration of the agreement. The agreement on apprenticeships would offer enough possibilities to allow for employment flexibility. Employers could block demands by the union to expand the quota for employees entitled to partial retirement.

Oliver Burkhard, Regional Director of IG Metall in North-Rhine Westphalia and chief negotiator of the union, said in a statement (in German) that the union would have liked a better outcome on partial and early retirement but was content with the pay rise, and with having achieved the goal of making permanent employment the norm for apprentices for the first time.

Heiner Dribbusch, Institute of Economic and Social Research, WSI

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