Agreements in chemicals and metalworking shape 2000 bargaining round

In March 2000, the collective bargaining parties in Germany's chemicals and metalworking sectors concluded new collective agreements on pay increases and partial retirement. Both agreements received very positive reactions and were widely regarded as a success for the national Alliance for Jobs.

In January 2000, the national tripartite "Alliance for Jobs" (Bündnis für Arbeit) adopted a joint statement on "employment-oriented bargaining policy" which contains recommendations for the 2000 collective bargaining round (DE0001232F). Among other items, the document called for longer-term agreements which should orient themselves around an available "distributive margin" based on productivity growth. The latter should not only be used for pay increases but also for the financing of "job-creating measures" such as "new employment-creating early retirement schemes". In March 2000, new collective agreements were concluded in the chemicals and metalworking sectors, which were widely regarded as fulfilling the Alliance's targets. Since chemicals and metalworking are among the most important German collective bargaining units, they may have set the benchmark for the whole 2000 collective bargaining round.

New agreements in chemicals

On 22 March 2000, the Mining, Chemicals and Energy Union (IG Chemie, Bergbau und Energie, IG BCE) and the German Federation of Chemical Employers' Associations (Bundesarbeitgeberverband Chemie, BAVC) concluded a so-called "chemicals collective bargaining alliance 2000" (Chemietarifbündnis 2000), which contains a package of new collective agreements for the 580,000 or so employees in the west German chemicals industry. In the preamble to the new agreements it is explicitly stated that "both bargaining parties will further strengthen competitiveness and investments in the German chemicals industry" and, therefore, they will "jointly follow a long-term collective bargaining policy in the spirit of the German Alliance".

In the current bargaining round, IG BCE was the only major trade union which did not set a figure for its bargaining demands but referred to the recommendation of the national Alliance and declared that the overall volume of increase should be equivalent to the increase in productivity in the chemicals industry, which is around 4.8%. By contrast, the chemicals employers declared that the Alliance's recommendation referred to the national average increase in productivity, which the Council of Economic Experts (Sachverständigenrat) has predicted to be around 2.6%. The compromise finally agreed contained a comprehensive bargaining package including the following issues.

Pay increases

Basic payments and vocational training payments will increase by 2.2% from 1 June 2000 (in some regions from July or August), and by a further 2% from June 2001 to February 2002 (also varying by region). Altogether, the agreement runs for 21 months.

Partial retirement

The existing 1998 partial retirement agreement ( DE9805265N ) has been extended until 2009 and adjusted in anticipation of the forthcoming changes in the Partial Retirement Law ( Altersteilzeitgesetz ). According to the new agreement, employees will have the right from the age of 55 to take partial retirement for a period of up to six years. An application for partial retirement can be rejected by an employer only if either 5% of the overall workforce or a certain percentage of workers aged 55 and older are already using the option of partial retirement.

The concrete working time arrangements during partial retirement have to be determined either by works agreements or by individual employment contracts. There is a possibility of using the so-called "block model", under which the employees continue to work full time in the first half of their partial retirement period, and then stop working in the second half. During partial retirement, the employees will receive at least 85% of former full-time net remuneration, instead of the 70% prescribed by law.

If the period of partial retirement ends before the statutory retirement age of 65, companies have to provide a severance payment in order to compensate for the employees' losses in statutory pension rights. According to the new partial retirement agreement, employers have to pay compensation of up to DEM 36,000 for employees who worked in a three-shift system, up to DEM 26,400 for employees who worked in a two-shift system, and up to DEM 21,600 for other workers.

Capital-forming payments and additional pensions scheme

In 1998, the chemicals collective bargaining parties concluded for the first time an agreement on an additional pension scheme which gives companies the opportunity to use existing collectively agreed "capital-forming payments" for the financing of additional company pensions ( DE9805265N ). The new agreement determines an increase in the annual payment to the collectively agreed additional pensions scheme from DEM 936 to DEM 1,200.

Promotion of vocational and further training

In 1998, IG BCE and BAVC agreed to increase the number of apprenticeships by 5%. Since they were able to meet that target they now have expressed their expectation of a further 5% increase by the end of 2002. Furthermore, the bargaining parties have recommended that vocational trainees be taken on for at least 12 months at the end of their training. Finally, the existing regional "round-tables on labour market policies" in the chemicals industry will continue their work of promoting further training, in particular, for unemployed, low-paid and low-qualified chemical workers.

New opening clause

In recent years, a growing number of chemical companies have outsourced parts of their activities, such as logistics or canteens. As a result, these outsourced areas are often not covered by any collective agreements or have switched to "cheaper" sectoral agreements. In order to avoid a further "flight" from the chemicals agreements, the collective bargaining parties have now introduced an "opening clause" in the chemicals framework collective agreement, according to which the management and the work council are allowed to conclude a works agreement determining payments below the collectively agreed level. The opening clause is valid for all those areas of chemicals companies which overlap with other competing sectoral agreements. In all cases, IG BCE and BAVC must give their support for the use of this opening clause. In addition, the chemicals bargaining parties have agreed that, for the safeguarding of employment or the improvement of competitiveness, they are ready to conclude company agreements which might diverge from the sectoral agreement.

New agreements for east Germany

On 3 April 2000, the collective bargaining parties reached a further agreement for the 30,000 or so employees in the east German chemicals industry. With a term of 22 months, the agreement provides for pay increases of 2.8% from 1 July 2000 and a further 2.8% from 1 July 2001. After the application of these new pay increases, east German chemical employees will receive 84.2% of west German pay levels.

Regarding partial retirement, the bargaining parties concluded a similar agreement to that for western Germany. From 1 January 2001, east German chemicals employees will for the first time receive capital-forming payments of DEM 576 per year, which may be used for additional pensions schemes at company level.

New agreements in metalworking

On 28 March 2000, the regional metalworking bargaining parties in North Rhine-Westphalia (NRW) reached a pilot agreement for the 3.3 million employees in the German metalworking industry. Originally, the IG Metall metalworkers' union had called for an overall increase of 5.5%, to include both pay rises and a financial contribution to the introduction of a new early retirement scheme from the age of 60 (DE9910217F). The metalworking employers' association, Gesamtmetall, however, sharply rejected both the overall level of IG Metall's bargaining claim as well as the proposed model for an early retirement scheme, and accused the union's demands of being in flagrant contradiction of the recent recommendations by the Alliance for Jobs (DE0001232F).

The NRW metalworking pilot agreements includes the following provisions:

  • pay increases. The pay agreements provide for a flat-rate payment of DEM 330 for March and April 2000, a 3% increase in wages and salaries from 1 May 2000 and a further 2.1% increase in wages and salaries from 1 May 2001 February 2002, and a 3% increase in vocational training payments from 1 March 2000. The pay agreements run until 28 February 2002;
  • partial retirement. The 1997 partial retirement agreement (DE9710133F) has been extended until 30 April 2003 and adjusted in anticipation of the forthcoming changes in the Partial Retirement Law. Under the new agreement, employees have the right from the age of 57 to take partial retirement for a period of up to six years on the basis of the "block model" (see above). An application for partial retirement can be rejected by an employer only if either 4% (from May 2002: 5%) of the overall workforce or a certain percentage of workers aged 57 and older are already using the option of partial retirement. As before, the employees in partial retirement will receive 82% of former full-time net remuneration. If the period of partial retirement ends before the statutory retirement age of 65, companies have to provide a severance payment of up to DEM 21,600 in order to compensate for the employees' losses in statutory pension rights;
  • working time. The existing framework agreement on working time, including the provisions on the 35 hour-week, has been extended until 30 April 2003;
  • vocational trainees: The period during which vocational trainees must be taken on on completion of training is extended from six to 12 months; and
  • capital-forming payments. The agreement on capital-forming payments has been extended from 1 January 2000 for another five years. The annual payment of DEM 624 may also be used for additional pensions schemes at company level.

In the two weeks after the conclusion of the NRW metalworking pilot agreement, all other regional bargaining districts adopted the NRW provisions, sometimes with some small regional variations. In the east German metalworking bargaining districts, IG Metall organised some warning strikes before final agreements could be reached. While east German metalworking employees receive the same collectively agreed basic pay as their western colleagues, there are still some significant differences regarding other payments and working time. A new agreement was concluded which foresees for the first time the introduction of capital-forming payments in the east, which should reach west German levels by 2005. At the same time, however, the current 38-hour week in east German metalworking was fixed until 30 April 2003.

Commentary

Both the chemicals and the metalworking agreements received generally positive public reactions and were widely regarded as a sign of success of the national Alliance for Jobs. While originally the unions sharply rejected any attempts to introduce national "bargaining guidelines" within the Alliance, collective bargaining policy has now become a central issue on the Alliance's agenda. Moreover, only one year after the German unions called for an "end of modesty" in pay policy (DE9810279F), the new agreements seem to mark a return to the moderate wage increases seen in most years during the 1990s (DE0002239N).

The course of the 2000 collective bargaining round was primarily determined by the chemicals sector bargaining parties. They started their negotiations three months before the expiry date of the current agreements in order to be the first to conclude a major agreement in 2000 and, thereby, become the "pattern-setter" for the whole bargaining round, a role which in Germany has usually been filled by the metalworking agreement.

Indeed, the chemicals deal placed enormous pressure, in particular, on the IG Metall metalworker's trade union, which not only had to give up its own model for early retirement at 60 but, in addition, had to accept very moderate wage increases in order to fulfil public expectations of an overall agreement which corresponds to the recommendations of the national Alliance. The contents of the new metalworking agreement, however, brought loud criticism from parts of the IG Metall membership, especially from those working in the highly profitable metalworking companies in the south of Germany. Some of them, such as the vice president of IG Metall, Jürgen Peters, have openly criticised the concept of a national Alliance whose major task is to "discipline the trade unions" (see Financial Times Deutschland, 20 April 2000).

Against the background of the predicted overall economic developments in Germany, the agreed pay increases, which - calculated on an annual basis - will be 2.2% in chemicals and 2.5% in metalworking in 2000 (2.1% and 1.7% in 2001), are exceptionally low. According to the 2000 spring forecast of the leading German economic institutes, Germany's productivity is estimated to increase by 3.1% in 2000 and 2.3% in 2001. Together with an assumed increase in the German harmonised consumer prices index of around 2%, there would have been a "distribution-neutral margin" of around 5% in 2000. The recent pay agreements would, therefore, definitively lead to a further redistribution from labour income to profit income.

Finally, there is also a European dimension to the recent pay settlements. Since German pay developments have become widely regarded as a kind of pattern-setter within the whole area of the EU Economic and Monetary Union (EMU) the recent German pay agreements also put some competitive pressure on pay bargaining in other EMU countries. While the president of the European Central Bank, Wim Duisenberg, has expressed his great satisfaction with the latest outcomes of German pay bargaining, there might be some less positive comments, especially among other European trade unions. (Thorsten Schulten, Institute for Economic and Social Research, WSI)

Annex: Comparison of the new agreements in chemicals and metalworking

Issue Chemicals Metalworking
Pay increase 2.2% from June 2000; 2.0% from June 2001 to February 2002. 3.0% from May 2000; 2.1% from May 2001 to February 2002; DEM 330 flat-rate payment for March/April 2000.
Pay increase calculated on an annual basis 2000 - 2.2%; 2001 - 2.1%. 2000 - 2.5%; 2001 - 1.7%.
Partial retirement From the age of 55 for up to six years; payments during partial retirement of at least 85% of former full-time net remuneration; compensation for pension losses of up to DEM 36,000. From the age of 57 for up to six years; payments during partial retirement of 82% of former full-time net remuneration; compensation for pension losses of up to DEM 21,600.
Additional pension scheme Increase in annual payment from DEM 936 to DEM 1,200. Annual payment of DEM 624 (as before).
Vocational trainees Recommendation to take on vocational trainees for at least 12 months. Vocational trainees have the right to be taken on for at least 12 months.

Source: WSI Collective Agreement Archive.

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