Ostmetall and Christian Metalworkers' Union conclude innovative package of agreements

In May 1998, Ostmetall, the eastern German metalworking employers' association, and the Christian metalworkers' union, CGM, concluded a package of collective agreements known as "Phönix".

On 15 May 1998, after 18 month of intense negotiations, the eastern German metalworking employers' association, Ostmetall, and the Christian Metalworkers' Union (Christliche Gewerkschaft Metall, CGM) concluded a package of collective agreements known as Phönix. Ostmetall is an association of the three regional metalworking employers' associations of Saxony, Saxony-Anhalt and Thuringia. It was founded in March 1998 (DE9803157N) and is a member of metalworking sector peak employers' association, Gesamtmetall. Its bargaining partner, CGM is affiliated to the Christian Federation of Trade Unions (Christlicher Gewerkschaftsbund, CGB). Of CGM's 100,000-plus members in Germany, 15,000 are organised in Saxony, Saxony-Anhalt and Thuringia. In the metalworking and electrical sector, CGM competes with IG Metall, the metalworkers' union affiliated to the German Trade Union Federation (Deutscher Gewerkschaftsbund, DGB), especially as regards works council elections and collective agreements in crafts. IG Metall had about 2.7 million members in 1997 (DE9802147F).

Contents of Phönix

Phönix is a package of eight collective agreements, two framework agreements on employment conditions and six ordinary industry-level agreements. Phönix aims to reform industry-level collective agreements, making a contribution to social peace and increasing the responsibility and partnership of all parties involved. Its provisions include the following:

• weekly working hours. Weekly working time may vary between 31 and 42 hours;

• annualised working time and working time corridor. A flexible annual working time "corridor" of between 1,800 and 2,200 hours is introduced. Furthermore, Phönix includes an "opening clause" which stipulates that in order to safeguard jobs, management and works councils may conclude voluntary works agreement s which reduce annual working time further to a minimum of 1,600 hours;

• long-term working time accounts and part-time employment for older workers. Long-term working time accounts are introduced, which may be used for sabbaticals or the newly established system of part-time employment for older workers (Altersteilzeit);

• compensation and pay structure. A general compensation system for all employees is established, without distinction between workers and salaried employees. All employees receive the agreed monthly wage irrespective of actual hours worked. Furthermore, employees are subject to performance-related pay schemes. The age-related grading systems for salaried employees are abolished. In addition, annual extra payments are integrated into basic pay;

• "entrance wages". Companies may pay newly hired employees 95% of collectively agreed wage rates during the probation period. Those employees who were formerly long-term unemployed may receive 90% for a period of up to one year;

• profit-sharing. Employees and vocational trainees are entitled to be included in a profit-sharing system. Details are to be agreed in voluntary works agreements;

• holiday entitlements. Up to 10 days of annual holiday entitlement may be either stored on the working time account or cashed in;

• continued payment of remuneration in the event of sickness. Employees receive 100% continued payment from the fourth day of sickness onward. During the first three days, the employee can choose between either receiving 80% of previous wage income or sacrificing 1.5 hours from her or his working time account per day of sickness;

• conflict resolution. The bargaining parties agreed on the introduction of a new joint dispute resolution procedure (Schlichtungsordnung) in order to minimise the probability of industrial action. A joint "consulting committee" (Beraterausschuß) of external consultants is established, which analyses the situation of the metalworking industry every six months. Either of the bargaining parties may terminate a valid agreement up to three months before the current agreement expires. Claims have to be submitted at the same time, and within four weeks the social partners must start negotiations. New agreements are to be concluded before the old one expires. The peace obligation is extended by a period of four weeks after the expiry of the agreement. If the negotiations fail, both parties will automatically enter a arbitration procedure. Only in the event that the arbitration procedure fails may either one of the bargaining parties resort to industrial action; and

• cost-neutrality of Phönix: If a company chooses to implement Phönix, its wage bill which derives from labour costs arising from collectively agreed regulation may not decrease due to the introduction of the new wage structures.

Reactions to Phönix

For CGM, Phönix represents a collective bargaining breakthrough for the German metalworking sector. Both bargaining parties hope that Phönix contributes to the stabilisation of industry-level bargaining in eastern Germany. Working time flexibility and the increased importance afforded to the social partners at company level are intended to increase the efficiency, productivity and attractiveness of the production locations in the area covered by the agreements and thus to safeguard and create jobs.

The vice-chair of IG Metall, Walter Riester, called Phönix a threat to collective bargaining autonomy. In future, IG Metall would not bargain with Ostmetall but with its regional member associations. Gesamtmetall president Werner Stumpfe regards Phönix as a reaction to the claims of IG Metall for further working time reductions with full wage compensation in eastern Germany. Nevertheless, western as well as eastern German metalworking employers' associations would still be very interested in reforming industry-level bargaining with IG Metall (DE9712240F).

Commentary

The question remains of the importance of Phönix for German industrial relations. Critics, especially from the non-Christian trade union side, claim that the agreement is relatively unimportant since it potentially covers only 15,000 employees. Furthermore, they regard it as a "slap in the face" for IG Metall and a backlash against the negotiations for the reform of industry-level bargaining in the metalworking sector.

However, Phönix has attracted a lot of attention from the social partners, the media and the public alike, mainly because it represents a collective bargaining innovation in two ways:

First, Phönix represents a "lean" and flexible package of industry-level collective agreements which allows scope for the company-level social partners and includes a new type of conflict resolution mechanism. This was welcomed especially by business. The package furthermore shows that it is actually possible to establish collectively agreed rules in the German metalworking sector which allow enough space for company-level governance of the employment relationship, especially as regards progressive human resource management techniques. Gesamtmetall is already discussing the extension of the agreement to western Germany.

Second, the conclusion of Phönix has led to a situation where two industry-level collective agreements are competing in the Saxony, Saxony-Anhalt and Thuringia metalworking sector. One intention of Ostmetall in concluding Phönix may have been to offer an alternative regulatory framework to companies which feel that they suffer from the IG Metall "straightjacket" or are not members of an employers' association. In eastern Germany, only a minority of companies are members of employers' associations subject to industry level agreements (DE9708128F).

A final comment on Phönix relates to collective bargaining autonomy: Tarifautonomiesays nothing about a representative monopoly of IG Metall in German metalworking sector labour relations. Any labour relations innovations that may safeguard or create jobs, especially when reached within the framework of collective bargaining autonomy, should be cheered, not feared. (Stefan Zagelmeyer, IW Köln)