New collective agreements signed in west German banking

At the end of May 1997, the collective bargaining parties in the west German banking sector concluded new agreements on pay increases, continued payment in the case of illness and partial retirement

On 28 May 1997, new collective agreements were concluded for the 460,000 or so employees in west German banking. The signatories were the commerce, banking and insurance workers' trade union HBV (Gewerkschaft Handel, Banken und Versicherungen) and the white-collar workers' union DAG (Deutsche Angestellten-Gewerkschaft) on one side, and the employers' association for private banking (Arbeitgeberverband des privaten Bankgewerbes) and the collective bargaining community for public banks (Tarifgemeinschaft öffentlicher Banken) on the other.

One of the most important tasks in the 1997 collective bargaining round in German banking was to find an agreement on continued payment in the case of illness. After the German Government changed the law on sick pay in 1996 (DE9702202F) requiring employers to pay employees only 80% of previous pay during the first six weeks of sickness, instead of the former 100%, the banking employers started to pay only 80% sick pay, because there were no collectively agreed regulations on sick pay in banking at that time. Confronted with several protests by banking employees, the employers finally decided to continue with 100% sick pay. Now a new agreement has been concluded which, for the first time, provides for 100% continued payment in the event of illness.

The banking employers, however, were only ready to accept the new agreement on continued payment in the case of illness because the unions agreed to a full compensation of costs by concluding very moderate pay increases. The new wage agreement contains a 2% pay increase from 1 December 1997 until the end of 1998 and a one-off payment of DEM 300 for the months of May to November 1997. According to the unions, these results are equivalent to a 1.65% wage increase for the whole term of the new wage agreement.

Furthermore, the collective agreement parties agreed to an increase of vocational training pay of DEM 15 per month from December 1997. In a joint statement, the social partners demand that banking employers create more vocational training places and make sure that the trained employees get a job at the same company for at least six months after the training has been terminated.

The collective bargaining parties also concluded a new collective agreement on partial retirement (Altersteilzeit) which essentially applies the new partial retirement law (Altersteilzeitgesetz) of 1996 (DE9704108F). According to this law, companies can create part-time work for older employees who have reached the age of 55 or older. In the event of this partial retirement, working time can be reduced to a minimum of 18 hours per week, but the employees have to receive at least 70% of their former full-time remuneration. If employers use partial retirement for the creation of new jobs for younger workers, they can receive 100% compensation of their additional costs arising from partial retirement from the Federal Employment Service (Bundesanstalt für Arbeit), otherwise they will receive only a subsidy of 20%, at the most.

The new collective agreement on partial retirement in banking foresees application of the new law by using the so-called "block-model". This means that companies can create special working time models for older employees who, over a period of five years, reduce their average working time to a minimum of 18 hours per week. In practice this could mean, for example, that employees work full time in the first two and a half years and reduce working time to zero hours in the second two and a half years. In any case, the specific model of partial retirement has to be concluded at company level.

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