Tripartite agreement on Employment Alliance for eastern Germany

On 22 May 1997, Federal Government, trade and employers' associations, and trade unions agreed on an employment alliance known as the Joint initiative for more jobs in eastern Germany.

On 22 May 1997, a new employment alliance for eastern Germany was concluded between the German Federal Government, the German Trade Union Federation (DGB), the German Salaried Employees' Union (DAG), the Confederation of German Employers' Associations (BDA), the Confederation of German Industries (BDI), the German Association of Chambers of Commerce (DIHT), the Central Association of German Crafts (ZDH) and the Associations of the Credit Institutions (Kreditgewerbe). Its primary objectives are to: speed up the transformation process of the eastern German economy; boost growth; reduce unit labour costs; stabilise employment in 1997 at the level of 1996; and create 100,000 new jobs in each of the following years.

Among other measures to be implemented by the state and the private sector, the Joint initiative for more jobs in eastern Germany (Gemeinsame Initiative für mehr Arbeitsplätze in Ostdeutschland) provides for several guidelines regarding industrial relations in eastern Germany. In order to preserve and create jobs the signatories agreed the following.

  • Collective bargaining policy, especially collective wage bargaining, must pay due regard to employment, and to the particular economic and commercial circumstances of the individual firm. This will be achieved by the reform of the existing industry-level collective bargaining system. Furthermore, the bargaining partners will jointly search for solutions to close the unit labour cost-gap between eastern and western Germany.
  • In collective bargaining, the bargaining partners will provide for special regulations regarding small and medium-sized enterprises, employment pacts, the taking on of vocational trainees, the creation of part-time jobs, and long-term policies such as profit-sharing plans in order to stabilise labour costs
  • The social partners will increasingly make use of more flexible working time arrangements, such as working time accounts. In addition, they will support the integration of long-term unemployed, people and new and re-entrants into the labour market, by special regulations.
  • The bargaining partners will establish practicable and effective "hardship clauses" in case an employer faces genuine difficulty in meeting the terms and conditions of the current collective agreements. These hardship clauses (DE9703205F) shall ensure binding decisions within a maximum of two weeks.
  • The development of new training occupations and the modernisation of existing ones will allow for more scope for individual firms and more flexibility regarding the contents of training occupations (DE9704107F). In order to increase the supply of apprenticeships, the social partners will review the collective agreements to detect impediments to training. They will also review the costs of vocational training. Furthermore, the bargaining partners will discuss the establishment of a new issue for collective bargaining, regarding cost reductions for private enterprises, public utilities and governments which increase their number of vocational trainees.

The signatories will review the implementation of the programme every six months.

The programme was welcomed by all signatories and the minister-presidents of the eastern German states. According to Dieter Schulte, chair of the DGB, this agreement means neither a wage freeze for eastern Germany, nor the undermining of employees' rights. Both the DGB and the employers' associations regard a transfer of the programme to western Germany as possible.

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