In February 1999, the ÖTV and DAG trade unions reached a collective agreement with the municipal employers' association, VKA, covering public utilities, which is expected to act as a pilot for the modernisation of industrial relations in other areas of the public sector.
In February 1999, the public sector and transport employees' trade union (Gewerkschaft Öffentliche Dienste, Transport und Verkehr, ÖTV) and the German White-Collar Workers' Union (Deutsche Angestelltengewerkschaft, DAG) concluded a package of agreements with the municipal employers' association (Vereinigung der kommunalen Arbeitgeberverbände, VKA). The settlement is the result of three years of negotiations and will cover 110,000 employees in approximately 1,600 public utilities establishments.
In brief, the deal includes the following provisions:
- the possibility of regulating detailed matters at the local or establishment level between management and employee representatives;
- abolition of the distinction between blue-collar workers and salaried employees. This represents a novelty for public sector labour relations;
- abolition of the system of 120 different types of remuneration, supplements and bonuses;
- a uniform grading system and a uniform pay system;
- the introduction of performance-related elements of remuneration. Remuneration (and promotion) will in future be related to performance (and in some cases to profits) instead of job description. Performance-related pay schemes will be introduced and managed by establishment-level commissions;
- the introduction of flexible annual working hours on the basis on a 38.5 hour working week including a working time "corridor" allowing for a maximum of 48 weekly working hours, worked between 06.00 and 20.00. Within this time frame, overtime is abolished; and
- flexible working time models may be introduced by works agreement.
Especially noteworthy is the "lean" shape of the agreement, which has only 23 paragraphs. The agreement is widely regarded as pilot agreement for the reform of public sector industrial relations, especially as regards the reform of the civil service pay scale, known as BAT (Bundesangestelltentarif).
ÖTV regards the deal as milestone for the modernisation of collective bargaining in the public sector, which proves that modernisation is not associated with the reduction of labour standards. Owing to the agreement, jobs will be secured, companies will remain competitive and employment conditions will remain linked to the public sector.
According to the public employers, the agreement includes elements which are compatible with the principles of performance and competition. Furthermore, it is regarded as easy and flexible to apply. The agreement should also allow the public utilities to compete in the newly liberalised energy markets and, as mentioned, it is expected to have a pilot function for other areas of the public sector.