New agreement on job security signed for railway employees

In late February 2005 a package of collective agreements on pay and job security was concluded for about 140,000 employees at Deutsche Bahn AG, Germany's major railway company. The settlement provides for protection against dismissal for all employees with at least five years' service until the end of 2010, and lump-sum payments worth EUR 50 for each month from July 2005 until June 2007. On 30 June 2007, there will be a general pay increase of 1.9%. In return, the trade unions have agreed to concessions that will allow Deutsche Bahn to reduce its labour costs by 5.5%.

A package of collective agreements on pay and job security covering some 140,000 employees of the Deutsche Bahn AG (DB AG) railway company was signed on 28 February 2004. The signatories were the three trade unions organising German rail workers - Transnet, affiliated to the German Trade Union Federation (Deutscher Gewerkschaftsbund, DGB), Verkehrsgewerkschaft GDBA, affiliated to the German Federation of Career Public Servants (Deutscher Beamtenbund, DBB). and the German Engine Drivers' Union (Gewerkschaft Deutscher Lokführer, GDL), also affiliated to DBB - and the Employers' Association of Mobility and Transport Service Providers (Arbeitgeberverband der Mobilitäts- und Verkehrsdienstleister, Agv Move), representing DB AG. Transnet and GDBA are united in a formal 'collective bargaining association' based on a mutual agreement between the two unions.

The package comprises a 'collective agreement to safeguard employment' (Beschäftigungssicherungstarifvertrag, BeSiTV) which had already been negotiated in December 2004, plus a new collective agreement on pay and a new agreement on profit-related pay that was agreed in final negotiations on 28 February, in talks which took place after Transnet and GDBA had held meetings to consult their membership on the outcomes so far. On 24 March, the BeSiTV was extended to a number of subsidiaries of DB AG. The collective agreements do not affect the 40,000 career civil servants who work for DB AG. Civil servants in Germany are legally exempt from collective bargaining but also from dismissal.

Agreements in detail

Since the start of the privatisation and restructuring of the former federal railways in 1994 and the massive job cuts which accompanied this process, job security has always been a prominent issue in collective bargaining. As early as 1996 a first agreement on job security was concluded by the bargaining parties, which was followed by a so-called employment pact (Beschäftigungspakt) (DE9810277N) in 1998. In 2000, the bargaining parties concluded an 'alliance to safeguard the future' (Bündnis für Zukunftssicherung) (DE0006269F), which was to stay in place until the end of 2004. This triggered new negotiations which eventually resulted in the new collective agreement to safeguard employment (BeSiTV).

The BeSiTV rules out forced redundancies until the end of 2010 for all employees (except assigned civil servants) who have at least five years' service with DB AG. In return, the trade unions have agreed to concessions that will allow the company to reduce overall labour costs by 5.5%. To achieve this goal, in return for the job guarantees given by the company, the standard weekly working time on which monthly wages are based will be increased from 38 to 39 hours without extra pay, as of July 2005. Further details on how to implement the cost savings are to be negotiated in detail with management representatives from the various divisions and subsidiaries of DB AG. Amongst the various means envisaged to achieve the 5.5% cost reduction are either extensions or reductions in weekly working time, depending on the economic needs of the subsidiary concerned, a reduction of paid annual leave by one day and/or cuts in bonus payments.

The BeSiTV applies from 1 January 2005 until 31 December 2010. However, the bargaining parties agreed on a clause that allows the agreement to be cancelled if DB AG is legally required to give up ownership of the rail network. In this case, both the company and trade unions could demand new negotiations. If these did not succeed within eight weeks, a joint dispute-resolution procedure would follow. If this procedure failed, the BeSiTV could be cancelled by either of the parties without further notice. Furthermore, in the event of the national or European guidelines for tendering being changed, the employer could demand a renegotiation. However if the joint dispute-resolution procedure on this point finally broke down, the BeSiTV could only be cancelled with six months' notice.

There will be no general pay increases in 2005 and 2006, but following four 'zero-months' without any additional payment, DB AG will pay each worker a monthly lump sum of EUR 50 for each month from 1 July 2005 until 30 June 2007. On 30 June 2007, when the new collective agreement on pay ends, a pay increase of 1.9% will be awarded and new pay negotiations will start based on this increased pay level. The pay agreement has a duration of 28 months from 1 March 2005 until 30 June 2007.

Furthermore, the bargaining parties have agreed to a new profit-related bonus payment. For 2005, this payment is fixed at EUR 100 for each employee. From 2006 to 2010 the payment will be related to the company's operating profit. The parties agreed on a scale which, depending on actual profit, sets bonus payments at between EUR 50 and EUR 600. For the years from 2008 to 2010, however, a guarantee has been given that if profits are not sufficient to allow any bonus payments - and therefore the amount of money designated to cover the bonus payments is saved by the company - these outstanding amounts will be paid in arrears in the years 2011 to 2013.

Final negotiations preceded by rank-and-file consultation

The negotiations on the BeSiTV had ended in December 2004, but in an unusual move in German collective bargaining, the bargaining commissions of both Transnet and GDBA decided that final consent would be given only after a consultation of their rank-and-file members had taken place. The trade unions scheduled about 140 rank-and file meetings across Germany to discuss the outcome of these negotiations and to respond to criticism. During these meetings, which involved about 8,400 members, the aim of avoiding forced redundancies was approved but considerable criticism was raised with regard to the extension of working time without pay. Following these meetings, the two unions decided to go back to the negotiating table and to demand some additional payments during the final negotiations over the package.

Reactions to the deal

The chief executive of DB AG, Klaus Mehdorn, said that the outcome was an important step towards competitiveness. He called the agreement a strong base to safeguard the future of both company and employees.

The chair of Transnet, Norbert Hansen, and the chair of GDBA, Klaus-Dieter Hommel, called the outcome a balanced compromise and a success for the employees. The lump-sum payments would add a 'social element' to the overall package. Both drew attention to the fact that rail employees would not be in the top league of wage earners and that the majority of employees would receive monthly wages of about EUR 1,800 in western Germany and EUR 1,700 in eastern Germany.

GDL was also content with the package and stressed that its demand to count all time (except legal breaks) between the beginning of a shift and its end as working time had been accepted by management.

Commentary

The new package of agreements in the rail sector must be seen against the background of an ongoing restructuring process of the former federal railways since its privatisation in 1994. From the beginning of this process, the trade unions have faced the challenge of how to react to massive job cuts, outsourcing and decentralisation. All employment pacts which followed privatisation did in fact not aim to safeguard the level of employment once achieved at the state-owned federal railways but rather they aimed to avoid as far as possible forced redundancies among those employees who - unlike the career civil servants in the rail sector -were not effectively protected against dismissal. To continue this in 2005 the trade unions were prepared to make substantial concessions with regard to pay and working time. The unions did not succeed in covering also those employees with less than five years' service, which adds a two-tier element to the BeSiTV.

The consultation of members by Transnet and GDBA prior to final approval of the BeSiTV gave room for discussion amongst the membership. This was an innovative moment in German collective bargaining culture and it will be interesting to see whether other trade unions follow this example. Whether those members who raised concerns during the consultation process are content with the final outcome remains another question. (Heiner Dribbusch, Institute for Economic and Social Research, WSI)