In February 2007, the Collective Agreement Archive (WSI-Tarifarchiv) of the Institute for Economic and Social Research (Wirtschafts- und Sozialwissenschaftliches Institut, WSI) within the Hans Böckler Foundation [1] (Hans Böckler Stiftung) published its overview report on collective bargaining in 2006 (in German, 1.7Mb PDF) [2]. The study evaluates collective agreements concluded in 2006, affecting some 9.7 million employees, representing about 51% of all those covered by a collective agreement. Another 4.2 million employees received pay increases in 2006 which had already been agreed in previous years.[1] http://www.boeckler.de/cps/rde[2] http://www.boeckler.de/pdf/p_ta_jb_2006.pdf
In February 2007, the Institute for Economic and Social Research presented its annual report on Germany’s 2006 collective bargaining round. The study evaluates collective agreements concluded in 2006, affecting some 9.7 million employees. A further 4.2 million employees received pay increases in 2006 which had already been agreed in previous years. The average increase in collectively agreed wages and salaries was 1.5% in 2005, which was below the 1.6% increase of the previous year. According to the Federal Statistical Office, actual gross wages and salaries rose by only 0.7% in 2006.
Report on collective agreements
In February 2007, the Collective Agreement Archive (WSI-Tarifarchiv) of the Institute for Economic and Social Research (Wirtschafts- und Sozialwissenschaftliches Institut, WSI) within the Hans Böckler Foundation (Hans Böckler Stiftung) published its overview report on collective bargaining in 2006 (in German, 1.7Mb PDF). The study evaluates collective agreements concluded in 2006, affecting some 9.7 million employees, representing about 51% of all those covered by a collective agreement. Another 4.2 million employees received pay increases in 2006 which had already been agreed in previous years.
In 2006, the trade unions had initially called for pay increases of between 4% and 6%, the exception being the German Metal Workers’ Union (Industriegewerkschaft Metall, IG Metall) which demanded 7% in the steel industry. In return, employers demanded more wage and working time flexibility and, particularly in the public services sector, there was a demand for a general extension of weekly working times.
Collectively agreed pay increases
According to the WSI study, the average increase in wages and salaries in 2006 was 1.5% (calculated on an annual basis), which was lower than the 1.6% increase recorded in 2005 (DE0602205F). Table 1 outlines annual increases in collectively agreed pay from 2002 to 2006. Pay increases varied from sector to sector, between 0.5% in the public services and social security sectors, and 2.7% in the raw materials and production sector. The average increase in eastern German pay levels stood at 1.4%, compared to 1.5% in western Germany. Average collectively agreed pay in eastern Germany thus now amounts to around 95.1% of western German pay levels (94.6% in 2005).
| Sector | 2006 | 2005 | 2004 | 2003 | 2002 |
|---|---|---|---|---|---|
| Construction | 0.7 | 0.5 | 2.4 | 3.0 | 1.8 |
| Food industry | 1.6 | 1.8 | 1.9 | 2.7 | 2.6 |
| Transport and communication | 2.0 | 1.9 | 2.2 | 2.6 | 2.4 |
| Raw material and production industries | 2.7 | 2.0 | 2.1 | 2.5 | 3.2 |
| Horticulture, agriculture, forestry | 1.2 | 0.8 | 1.7 | 2.5 | 2.3 |
| Investment goods industry | 2.4 | 1.8 | 2.3 | 2.4 | 3.2 |
| Consumer goods industry | 1.5 | 1.5 | 2.1 | 2.3 | 2.8 |
| Commerce | 0.9 | 1.7 | 1.8 | 2.2 | 2.7 |
| Energy, water, mining | 1.8 | 1.8 | 1.7 | 2.2 | 2.4 |
| Private services, non-profit sector | 0.8 | 1.6 | 1.9 | 2.2 | 2.4 |
| Financial services | 2.1 | 1.7 | 2.4 | 2.1 | 2.4 |
| Public services, social security | 0.5 | 0.9 | 1.8 | 3.0 | 2.1 |
| All sectors | 1.5 | 1.6 | 2.0 | 2.5 | 2.7 |
Note: * Increases compared with previous year
Source: WSI, Collective Agreement Archive 2007
According to the Federal Statistical Office (Statistisches Bundesamt, Destatis), actual gross wages and salaries rose by 0.7% in 2006, compared with 0.5% in 2005.
The average duration period of collective agreements on pay signed in 2006 was 22.1 months (25.7 months in 2005). In eastern Germany, the duration period of collective agreements tended to be longer than in the bargaining areas in western Germany (Table 2).
| 1996 | 1997 | 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Western Germany | 16.2 | 16.8 | 12.7 | 13.8 | 21.5 | 14.1 | 18.1 | 20.4 | 21.8 | 25.2 | 21.6 |
| Eastern Germany | 14.7 | 23.3 | 16.4 | 19.7 | 21.0 | 22.0 | 28.4 | 24.7 |
Source: WSI, Collective Bargaining Archive, 2007
Many collective agreements contained so-called zero months, in other words, months within the period of the collective agreements in which the agreed pay increase was delayed (Table 3).
| Date | Sector | Provisions |
|---|---|---|
| 5 January2006 | Retail industry, BerlinPilot agreement(DE0602201N) | 6 zero months (July–December 2005); one-offpayments of €200 in 2006 and €75 in 2007 1% pay increase on 1 December 2006; valid until 30 June 2007 |
| 1 March 2006 | Paper processing industry,western Germany | 12 zero months (April 2005–March 2006); one-off payment of €150 in August 2006;1.5% pay increase on 1 April 2006 and2.0% increase on 1 April 2007; valid until31 March 2008 |
| 11 April 2006 | Hotels and restaurants, North-Rhine Westphalia | one zero month (April 2006);1.5% increase on 1 May 2006; 1.4% on1 May 2007; vaild until 31 March 2008 |
| 24 April2006 | Metal working industry, North-Rhine Westphalia Pilot agreement (DE0605039I) | €310 one-off payment for period March 2006 toMay 2006; 3.0% increase on 1 June 2006;vaild until 31 March 2007 |
| 19 May 2006 | Public sector, employees in federal states (DE0605029I) | One-off payments of €150, €100 and €50according to pay grade (low pay grades receivehighest one-off payment) in July 2006;€310/€210/€60 in January 2007; €450/€300/€100in September 2007; general pay increase of 2.9%with effect from 1 January 2008 (west)/1 May 2008 (east); valid until 31 December 2008 |
| 22 June 2006 | Banking (without co-operative banks)(DE0608029I) | One-off payment of €100 covering June toAugust 2006; pay increases of 3% with effectfrom 1 September 2006 and 1.5% with effectfrom 1 December 2007; valid until 30 June 2008 |
| 4 September2006 | Private transport industry,North-Rhine Westphalia | 4 zero months (May–August 2006);2.2% increase on 1 September 20061.8% increase on 1 August 2007; valid until 30 April 2008 |
| 21 September 2006 | Steel industry, LowerSaxony, Bremen, North-Rhine Westphalia | One-off payment of €500 for period from September to December 2006; 3.8% increase on 1 January, additional one-off payment of €750; valid until 31 January 2008 |
Source: WSI, Collective Bargaining Archive, 2007
Disputes over working time and plant closures
The 2006 collective bargaining round was marked by a number of strike actions – notably in the public sector. Most of these were triggered by employer demands to extend weekly working time. In April 2006, after nine weeks of strike action by municipal employees in Baden-Württemberg in southwest Germany, the United Services Union (Vereinte Dienstleistungsgewerkschaft, ver.di) and the municipal employers’ association, KAV Baden-Württemberg (KAVBW), secured a new collective agreement on working time (DE0605019I). The agreement stipulates that the standard weekly working time for municipal employees will increase by half an hour to 39 hours a week. It followed similar compromises in the federal states of Hamburg and Lower Saxony.
On 19 May 2006, following 14 weeks of strike action, the Employers’ Association of German Länder (Tarifgemeinschaft deutscher Länder, TdL) and ver.di agreed on a new framework collective agreement that will cover about 780,000 public sector employees in all federal states except Hesse and Berlin (DE0606029I). The agreement followed the longest strike action held in public services for decades. Part of the agreement was also a partial extension of weekly working time.
On 16 June 2006 the Marburger Bund (MB), a trade union representing medical doctors, and the TDL signed a new collective agreement on pay and working time covering some 22,000 medical doctors at university hospitals (DE0607019I). It followed several waves of warning strikes and 12 weeks of strike action involving up to 13,000 medical doctors. The dispute marked a sharp rift between the MB and ver.di and the end of a long period of joint collective bargaining on behalf of all staff in the healthcare service.
A number of disputes at factory level were triggered by plans to relocate or close production. As strikes are only legal in Germany for reasons that can be regulated by collective agreement, IG Metall tabled demands for collective agreements (Sozialtarifvertrag) to regulate relocations and closures. The most prominent of these disputes took place at Electrolux’s AEG site in Nuremberg (DE0603039I).
Gender pay gap
Although a considerable gap in average earnings between men and women continues to exist in Germany (DE0604019I), special provisions to tackle wage discrimination and to promote equal opportunities were not included in the collective agreements concluded in 2006.
Commentary
The disputes in the public sector underline the fact that the extension of weekly working time is still a prominent issue for employers. As in previous years, trade unions were largely defensive on this issue and had to accept various provisions which allow deviations from the agreed working time. In line with extended provisions on working time flexibility, therefore, the standard agreed working time remained in many industries more a point of reference than an indicator of the weekly hours actually worked. The average increase in collectively agreed pay of 1.5% (calculated on an annual basis) remained well below the cost-neutral margin of distribution of 3.6%, representing the sum of the year’s increase in consumer prices and labour productivity.
The fact that actual average gross wages and salaries rose by only 0.7% in 2006 shows that Germany was faced – just as in previous years – by a notable ‘negative wage drift’ whereby actual pay increases are significantly below average collectively agreed pay increases.
Heiner Dribbusch, Institute for Economic and Social Research, WSI
Eurofound recommends citing this publication in the following way.
Eurofound (2007), 2006 collective bargaining round examined, article.
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