New package of agreements in construction industry

In August 2007, the bargaining round in the construction sector ended when the employer organisations finally accepted a compromise on a new collective agreement on pay. The agreement provides for a general pay increase of 3.1% from 1 June 2007, with further increases in April 2008 and September 2009. The final settlement was reached following a joint dispute resolution procedure and 19 days of strike action in two northern German bargaining regions.

On 20 August 2007, the collective bargaining parties in the construction industry finally agreed on new collective agreements on pay covering some 550,000 employees in the German construction sector. The social partners involved included the Trade Union for Building, Forestry, Agriculture and the Environment (Industriegewerkschaft Bauen-Agrar-Umwelt, IG BAU) and two employer organisations, the Federal Association of the German Building Industry (Hauptverband der Deutschen Bauindustrie, HDB) and the Central Association of the German Building Industry (Zentralverband des Deutschen Baugewerbes, ZDB).

Content of agreement

Pay increase

Following two so-called ‘zero months’ without any pay increase in April and May 2007, the new agreement provides for a general pay increase of 3.1% with effect from 1 June 2007, a further 1.5% increment from 1 April 2008 and a 1.6% increase from 1 September 2009. The bargaining parties agreed on a general opening clause which allows for lower wages by up to 8% through collective agreement at company level; this scope for manoeuvre compares with a 10% margin in the previous agreements.

In addition, there will be a monthly lump sum payment worth 0.4% of the monthly wage – based on 173 hours – with effect from 1 June 2007; this will be followed by a monthly lump sum payment worth 0.5% of the monthly wage from 1 April 2008. This payment is subject to an opening clause which allows deviations under certain conditions by way of a works agreement. Remuneration for apprentices will be increased by 3.1% with effect from 1 June 2007 and by 1.6% from 1 September 2008.

The pay agreements are valid for 24 months until 31 March 2009.

Minimum wages

With effect from 1 September 2007, collectively agreed hourly minimum wages were set to increase in western Germany from €10.40 to €10.70 in scale 1 and from €12.50 to €12.85 in scale 2, apart from the capital city of Berlin, where the scale 2 increment would rise to €12.70. This collective agreement is valid until 31 August 2009. New rates for minimum wages in eastern Germany shall be negotiated by 31 March 2008 and will come into effect on 1 September 2008.

Pension fund

Contributions to the supplementary pension fund (Zusatzversorgungskasse) of the construction industry will be increased by 0.6% on 1 January 2008 and again on 1 January 2009. Half of the contribution has to be paid by the employees. The agreed increase will be financed by a proportional cut of the annual holiday bonus.

The general framework collective agreement (Manteltarifvertrag) was extended until 31 December 2008.

Tough bargaining round

The 2007 bargaining round lasted more than six months as reaching a sectoral collective agreement proved challenging. The employer organisations had difficulties in finding a consensus among their affiliates. A first compromise reached at the end of March 2007 was rejected by eastern German employers; the bargaining parties then agreed to enter into a joint dispute resolution procedure. A compromise resulting from this procedure was found on 19 May 2007; however, this failed to win the overall support of employers when two regional affiliates of ZDB, representing small enterprises in the northern states of Lower Saxony and Schleswig-Holstein, refused to accept the outcome. In response, IG BAU took official strike action in these bargaining regions. The strikes lasted 19 days and involved about 2,000 construction workers at 300 building sites. A further compromise resolved this dispute in July 2007 and, following final negotiations, the bargaining round was concluded on 20 August 2007.

The Chair of IG BAU, Klaus Wiesehügel, appeared satisfied with the outcome, emphasising the importance of having secured the sectoral collective agreement for the construction industry. The chief negotiator and Vice-president of HDB, Thomas Bauer, equally welcomed the final outcome and noted that it was very close to the compromise found in May 2007 (press release of 20 August 2007).

Commentary

The 2007 bargaining round underlined that the future of the sectoral collective agreement in the construction industry is far from secure. In particular, employers find it difficult to close ranks. However, IG BAU showed its determination and ability to call industrial action in defence of the sectoral agreement.

Heiner Dribbusch, Institute of Economic and Social Research, WSI