Christmas bonuses - an overview

Dribbusch, Heiner

Overview

Article

Christmas bonuses - an overview

Published: 21 December 2005

According to data published in November 2005 by the Collective Agreement Archive (Tarifarchiv) of the Institute for Economic and Social Research (Wirtschafts- und Sozialwissenschaftliches Institut, WSI) within the Hans Böckler Foundation (Hans-Böckler-Stiftung, HBS), almost three out of four, or 73%, of employees receive at least a Christmas bonus, a profit-sharing payment or some other annual bonus payment. The data [1] are based on an evaluation of some 30,000 online-questionnaires filled in by employees as part of the German Wage-indicator Project [2], and reveal that 84% of employees who are covered by a collective agreement receive such a bonus, compared with only 59% of employees not covered by collective agreements. Whereas 75% of respondents in western Germany said they received a bonus, only 61% of respondents in eastern Germany reported such a payment. The industries where employees are most likely to receive such a payment are chemicals, finance and the automotive industry - see table 1 below. Examining individual occupations, chemical laboratory assistants or industrial mechanics are twice as likely to receive an annual bonus payment as a waiter or waitress.[1] http://www.lohnspiegel.de/index.php?pid=53[2] http://www.lohnspiegel.de/

According to data published in November 2005 by the Institute of Economic and Social Research within the Hans Böckler Foundation (WSI), 73% of all German employees receive a Christmas bonus, a profit-sharing payment or some other annual bonus payment. While 84% of employees covered by a collective agreement receive such an annual payment, only 59% of employees not covered by a collective agreement do so. Most sectoral collective agreements provide for a Christmas bonus but the collectively agreed rates vary considerably between industries. Proposals by the new coalition government to cut the Christmas bonus for career public servants in 2006 have met with protests from trade unions.

According to data published in November 2005 by the Collective Agreement Archive (Tarifarchiv) of the Institute for Economic and Social Research (Wirtschafts- und Sozialwissenschaftliches Institut, WSI) within the Hans Böckler Foundation (Hans-Böckler-Stiftung, HBS), almost three out of four, or 73%, of employees receive at least a Christmas bonus, a profit-sharing payment or some other annual bonus payment. The data are based on an evaluation of some 30,000 online-questionnaires filled in by employees as part of the German Wage-indicator Project, and reveal that 84% of employees who are covered by a collective agreement receive such a bonus, compared with only 59% of employees not covered by collective agreements. Whereas 75% of respondents in western Germany said they received a bonus, only 61% of respondents in eastern Germany reported such a payment. The industries where employees are most likely to receive such a payment are chemicals, finance and the automotive industry - see table 1 below. Examining individual occupations, chemical laboratory assistants or industrial mechanics are twice as likely to receive an annual bonus payment as a waiter or waitress.

**Table 1. Christmas bonus, profit share or another annual bonus**
Employees who receive a bonus payment (in %)
Industries
Chemicals	89
Finance	86
Motor vehicles	83
Retail	66
Business services	62
Construction	56
Occupations
Chemical laboratory assistant	94
Bank business management assistant	91
Locksmith/industrial mechanic	85
Electrical engineer	79
Nurse	78
Social worker	77
Secretary	67
Sales person	58
Call centre operator	57
waiter/waitress	43

Source: www.lohnspiegel.de

According to an evaluation of collective agreements by the Collective Agreement Archive, agreements that include some kind of annual bonus exist in most industries. Most often the bonus is fixed as a percentage of the average monthly wage. The amount, however, varies considerably between the sectors - see table 2 below. In some industries. there are also marked differences between eastern and western Germany.

**Table 2. Collectively agreed annual bonuses (as % of one month's pay)**
Industry	Western Germany	Eastern Germany
Banking	100	100
Sweet products industry	100	100
Printing	95	95
Chemicals	95	65
Public sector	82.14	61.6
Insurances	80	80
Retail*	62.5	50
Wood and plastic processing**	57.5	60
Metalworking***	55	50
Construction industry	55	0

Notes: * in most bargaining areas, ** includes bargaining regions which include eastern and western German areas, *** in most bargaining areas following three years of employment.

Source: WSI-Tarifarchiv, November 2005

Employees in banking and the sweet products industry are entitled to an annual bonus which is equivalent to 100% of the monthly salary. In printing and in the western German chemicals industry, the rate is set at 95%. In many bargaining areas in the metalworking industry the amount of payment is linked to seniority. Employees with at least three years's service receive the maximum rate of 55% of a month's pay. These comparably low rates, however, have to be seen in connection with a relatively high holiday bonus in most bargaining areas in metalworking.

In eastern Germany, employees are often entitled to a Christmas bonus below the western German level. Some groups, such as eastern German construction workers, are not entitled to any Christmas bonus at all.

A number of collective agreements contain so-called opening clauses that allow a deviation from these rates under certain conditions (eg economic difficulty of the company concerned). In general, these deviations require the consent of the sectoral bargaining parties. However, some agreements also allow the parties at company level - ie works council and employer - to come to an agreement on whether they intend to make use of the opening clause. According to the WSI's fourth works and staff council survey carried out between January and March 2005 and covering a representative sample of establishments with 20 or more employees and a works council (DE0510202F), opening clauses that allow the payment of the annual bonus to be either cut or suspended are in place in 17% of establishments.

The Christmas bonus for career public servants, who are legally not entitled to collective bargaining, is fixed by the federal government or the federal states (Länder) respectively.

Plans to cut Christmas bonus for public servants

Plans within the new government coalition of the Christian Democratic Party (Christlich Demokratische Union, CDU), its Bavarian associate party the Christian Social Union (Christlich-Soziale Union, CSU) and the Social Democratic Party (Sozialdemokratische Partei Deutschlands, SPD) to cut the Christmas bonus for federal civil servants by half in 2006 became known to the public on 20 November 2005 and resulted in protests from both the Confederation of German Trade Unions (Deutscher Gewerkschaftsbund, DGB) and the German Federation of Career Public Servants (Deutscher Beamtenbund, DBB). In a statement to the press, Ingrid Sehrbrock - a member of the DGB executive council - said that DGB would try to reach a compromise allowing, for example, those public servants with low incomes to be exempt from cuts. The chair of DBB, Peter Heesen, also called for a revision of the plans.

The 300,000 or so federal public servants are currently entitled to a Christmas bonus equivalent to 60% of their monthly remuneration.

Commentary

For many employees, the Christmas bonus is an integrated and substantial part of their annual income. However, the Christmas bonus and other annual bonus payments have come under pressure with the spread of opening clauses in collective agreements. If the new government does implement a general cut in the Christmas bonus for career public servants at federal level this would very likely be a signal for further cuts in these bonuses at federal state and local level. (Heiner Dribbusch, Institute for Economic and Social Research (WSI))

Eurofound recommends citing this publication in the following way.

Eurofound (2005), Christmas bonuses - an overview, article.