First major agreements of 2002 bargaining round reached in chemicals

In April 2002, new collective agreements were concluded for the west and east German chemicals industry, providing for a 3.3% pay increase, an additional 0.3% increase as a result of a modernisation of the pay framework agreement, and a further adjustment of east German pay to west German levels. As the first major agreements signed in the 2002 bargaining round, the chemicals agreements will have an important influence on the ongoing negotiations in other sectors.

In April 2002, the Mining, Chemicals and Energy Union (Industriegewerkschaft Bergbau, Chemie, Energie, IG BCE) and the German Federation of Chemicals Employers' Associations (Bundesarbeitgeberverband Chemie, BAVC) concluded new collective agreements for the chemicals industry, first for west Germany, and later for the east.

West German agreements

On 18 April 2002, IG BCE and BAVC signed a package of new collective agreements for the 570,000 or so employees in the west German chemicals industry, which contains: a new pay agreement; a modernisation of the pay framework agreement; the introduction of a performance-related component in the annual bonus; and an agreement to continue the existing joint vocational training policy.

Pay increases

The new pay agreements came into force on 1 March 2002 (in some regions in April or May) and have a duration of 13 months. For the first month they provide for a flat-rate payment of EUR 85. From the second month onwards, wages and salaries will increase by 3.3%. Originally, IG BCE had demanded a 5.5% pay increase and a 12-month duration for the new pay agreement. However, the agreed pay increase is much higher than the agreed increase of 2.2% in 2000 and 2% in 2001 (DE0004255F).

Under the deal, vocational training payments will increase by a fixed amount of EUR 23 per month.

Modernisation of pay framework agreement

Chemicals had earlier been the first major industrial sector in which the collective bargaining parties abolished the traditional distinction between blue- and white-collar workers, and they have now agreed on a modernisation of the pay framework agreements in order to take into consideration changes in work and the emergence of new jobs in the industry. According to IG BCE, the adjustment of the pay framework agreement means on average an additional 0.3% pay increase, which should be added to the total pay 'volume' of the new collective agreement package.

Performance-related component in annual bonus

While the collectively agreed annual bonus (the so-called 'Christmas bonus') continues to be 95% of one month's pay, the social partners at company level now have the opportunity to introduce a performance-related component into the annual bonus. The management and the works council are now allowed to conclude a works agreement whereby the annual bonus can be reduced to 80% of a month's pay in difficult economic situations and increased to 125% in times of good performance. The works agreement has to lay down the criteria for measuring company performance and its relationship in concrete terms to the annual bonus. The works agreement must have a minimum term of four years.

Promotion of training

In 2000, IG BCE and BAVC agreed to increase the number of apprenticeships by 5% up to the end of 2002 (DE0004255F). They reached this target by the end of 2001. Both parties have now agreed to keep the current high level of apprenticeships as an important factor in guaranteeing a sufficient number of qualified junior staff in the chemicals industry. In addition, IG BCE and BAVC have agreed to continue with their regional 'round tables on labour market policies' in the chemicals industry, which were introduced in 2000 in order to promote further training, in particular for unemployed, low-paid and low-qualified chemical workers.

East German agreements

On 30 April 2002, IG BCE and BAVC concluded new collective agreements for the 30,000 or so employees in the east German chemicals industry. As in west Germany, wages and salaries will increase by 3.3% from 1 May 2002.

In addition, it was one of IG BCE's core demands to conclude a final plan for the gradual adjustment of east German pay levels to west German standards. Originally, IG BCE called for eastern pay levels to be adjusted from the current 84% of western pay to 100% by 2007. The new agreement foresees a gradual adjustment to west German pay levels by 2009. As a first step, east German chemicals employees will receive an additional pay increase of 2.8% from 1 October 2002. In the following 2003 bargaining round they will receive a further additional 2.8% pay increase above the normal increase concluded for the whole chemicals industry. The adjustment agreement includes, however, an 'opening clause', which under certain conditions allows companies with significant economic problems to postpone the pay adjustment.

Regarding the annual bonus, a performance-related component was also introduced in the east German chemicals industry. While the normal collectively agreed annual bonus is currently 65% of one month's pay, management and works councillors can agree to vary the bonus between 50% and 95% of one month's pay depending on the company's performance.

Reactions to the agreements

After the conclusion of the new agreements, both IG BCE and BAVC expressed their satisfaction with the results achieved. The chief negotiator for IG BCE, Werner Bischoff, called the agreements a good compromise which include significant pay increases as well as other 'innovative' elements such as a better pay framework and the promotion of vocational training. The president of BAVC, Rüdiger Erkel, emphasised in particular the performance-related component in the annual bonus as an 'entrance towards a more performance-related collective bargaining policy'.

Since the chemical agreements were the first major agreements signed in the 2002 bargaining round, they will also have an important influence on the ongoing negotiations in other sectors. The president of the Confederation of German Employers' Associations (Bundesvereinigung der deutschen Arbeitgeberverbände, BDA), Dieter Hundt, declared that the results of the chemicals agreement could not be transferred to other sectors, since the costs of the agreement are 'too high'. The president of the Confederation of German Industries (Bundesverband der deutschen Industrie, BDI), Michael Rogowski, endorsed this view and said that the chemicals deal should not be seen as a pace-setter for other sectors. However, many employers' representatives praised the fact that, in contrast with the current industrial conflict in metalworking (DE0205205F), the collective bargaining parties in chemicals were able to reach an agreement without industrial action.

The president of the German Metalworkers' Union (IG Metall), Klaus Zwickel, stated that new agreements in metalworking will have to exceed the agreed 'volume' in chemicals, since the metalworking industry currently has a much better economic performance. This view was endorsed by the president of IG BCE, Hubertus Schmoldt, who said 'nobody would understand why in the better-performing metalworking industry the employees should accept lower pay increases than in chemicals.'

Commentary

The new collective agreements in the German chemicals industry are in many respects remarkable. First of all, they provide for pay increases which are the sector's highest since 1995 and are significantly higher than in the previous two years, when the employees had to accept a decrease in real pay (DE0201201F). The chemicals deal reflects some 'backlog demand' on the employees' side and will set the pace for some higher pay increases in other sectors.

Second, it is notable that, after 2000, this is the second time that chemicals rather than (as is traditional) metalworking has been the pace-setter in German collective bargaining. While in most sectors collective bargaining seems to have become much more conflictual in recent years, there appears to be a 'special negotiating culture' between the collective bargaining parties in chemicals, which allows them to find acceptable bargaining compromises without major industrial action. However, it is also true that the more conflictual collective bargaining in metalworking has had its influence on the negotiations in chemicals and given at least a sign to the employers that a continuation of the extremely moderate pay increases of the previous years might provoke some stronger resistances even among the less 'strike-accustomed' employees in chemicals. (Thorsten Schulten, Institute for Economic and Social Research, WSI)