Chemical industry’s positive view on working life and demography agreement

In September 2010, social partners in the German chemical industry met to discuss the interim results of their collective agreement on working life and demography. The agreement was signed in 2008 to counter the effects on the industry of Germany’s ageing society. One of its core elements is a demographic analysis and it also contains incentives for employees to prolong their working lives. The agreement affects around 550,000 employees in 1,900 companies in the sector.

Background

The German Federation of Chemical Employers’ Associations (BAVC) and the Mining, Chemicals and Energy Industrial Union (IG BCE) signed their agreement (in German) on working life and demography in April 2008. BAVC and IG BCE stressed that, as a result of the need to remain competitive and innovative, human resource management has gained greater importance in chemical companies. In September 2010, representatives of BAVC and IG BCE, among others, met to discuss the interim results of the agreement and future developments.

Interim results

The core elements of the agreement (in German, 184 Kb PDF) are a demographic analysis and the introduction of ‘demography funds’ at company level. The analysis seeks to establish the kind of skills and qualifications employees have, and how the company’s needs and the supply of skills might change in the next few years. Its main function, therefore, is to assess the age structure and qualifications of the staff. Based on this, the agreement provides for age and health-based measures, staff training at all ages and formulates flexible instruments for the transitional periods between employees’ training, employment and retirement.

To reach the goals of the agreement, employers invest €300 per year, per employee, in a fund to finance the following measures at company level:

• old-age pensions;

• working time accounts;

• occupational disability insurance;

• partial retirement schemes;

• partial retirement pensions.

In practice, the employer and the works council have to agree on the details and implementation of the demographic analysis in their company. The social partners then negotiate a works agreement on the use of the demography fund, and which of the five instruments listed above is to be implemented. The collective agreement on working life and demography stipulated that these changes had to be adopted by the end of 2009. In 2010 employers started paying into the demography funds and enacting the measures agreed with their works councils.

In September 2010, BAVC and IG BCE presented the interim results (in German) concerning the implementation of the collective agreement in the chemical industry and reported the following trends:

• the demography analysis has become a standard procedure in most of the industry’s 1,900 companies;

• more than half of the companies used their fund to supplement collectively agreed old-age pensions;

• another 20% of establishments spent the money on working time accounts;

• the fund was also used for partial retirement schemes and occupational disability insurance, but there has been little support so far for partial retirement pensions.

View of social partners

In a press statement (in German, 77.5Kb PDF) issued in September 2010, BAVC General Manager Hans Paul Frey highlighted the fact that chemical companies had tackled the effects of demographic change at an early stage. This proactive strategy would soon prove to be a competitive advantage for companies. With the collective agreement on working life and demography, the social partners in the industry had demonstrated their ability to develop innovative solutions for vital challenges.

IG BCE representative Peter Hausmann stressed that in Germany the debate on its ageing society was characterised by a pessimism which was not helping to deal with the problem. The social partners in chemicals, however, agreed to continue their efforts and to create working conditions that would suit employees at every age.

Sandra Vogel, Cologne Institute for Economic Research (IW Köln)