Interim report on 2000 collective bargaining round

In July 2000, the WSI research institute presented an interim report on Germany's 2000 collective bargaining round. The study evaluates collective agreements concluded in the first half of 2000, affecting about 57% of all employees covered by an agreement. The average increase in wages and salaries will be around 2.3% in 2000 - significantly lower than the average increase of 3.0% recorded in 1999, but still higher than the 1.8% increase in 1998.

In July 2000, the collective agreement archive of the Institute for Economic and Social Research (Wirtschafts- und Sozialwissenschaftliches Institut, WSI) within the Hans-Böckler Foundation published an interim report on the 2000 collective bargaining round ("Tarifpolitischer Halbjahresbericht. Eine Zwischenbilanz der Lohn- und Gehaltsrunde 2000", Reinhard Bispinck/WSI-Tarifarchiv, WSI Informationen zur Tarifpolitik, July 2000). According to the WSI study, the average pay increase in 2000 will be around 2.3%, which is significantly lower than the 3.0% increase recorded in 1999 but still higher than the 1.8% increase in 1998 (see table 1 below). The pay increases vary from sector to sector between 1.9% and 2.9%. While in most sectors, pay increases are significantly lower than in the previous year, there are a few sectors (the food industry, consumption goods industries and private services) which have seen higher pay increases than in 1999. Moreover, in 2000, for the first time, the average increase in east German pay levels (2.0%) will be below the increase in west German levels (2.3%) which is mainly a result of an extensive pay freeze in the east German construction industry.

Assuming a probable rate of inflation of 1%-1.5% and a probable increase in labour productivity of 3% in 2000, pay increases are very moderate and will not exhaust the "cost-neutral margin of distribution" (kostenneutraler Verteilungspielraum) of at least 4%. As a result, there will be a further redistribution from labour to capital income and a further decline of the "wage share" - ie the share of labour income in national income.

Table 1: Increases in collectively agreed pay, 1998-2000*
Sector 2000** 1999 1998
Commerce 2.9% 3.2% 2.3%
Food industry 2.9% 2.7% 2.0%
Consumption goods industry 2.8% 2.6% 1.6%
Investment goods industry 2.5% 3.6% 1.8%
Raw material and production industries 2.4% 2.4% 2.1%
Private services 2.4% 2.1% 1.5%
Private transport 2.4% 3.0% 2.0%
All sectors 2.3% 3.0% 1.8%
Banking, insurance 2.0% 3.1% 1.5%
Horticulture, agriculture, forestry 2.3% 2.3% 2.0%
Public services 1.9% 3.2% 1.9%
Energy, water, mining 1.7% 1.9% 1.5%
Construction 1.6% 2.0% 1.3%

* Increases against the previous year; ** figures are calculated on the basis of collective agreements in the first half of 2000 (up to 20 June).

Source: WSI Collective Agreement Archive 2000.

In the first half of 2000, trade unions affiliated to the German Federation of Trade Unions (Deutscher Gewerkschaftsbund, DGB) concluded new collective agreements for about 12.5 million employees - around 57% of all German employees covered by a collective agreement. Initially, the unions demanded total increases of between 4% and 5.5% including both pay rises and financial contributions to new arrangements for partial and early retirement (DE0003243N). Since most employers' associations sharply rejected these demands, the majority of the new pay agreements provide for pay rises of between 2% and 3% in 2000 (for details of the new collective agreements, see table 2 annexed to this feature). Moreover, many of the sectoral pay agreements run for two years and determine the pay rises in 2001, which will be between 2% and 2.5% under a majority of the agreements.

Apart from pay rises, the issue of partial retirement has been the most prominent topic in the 2000 collective bargaining round. In many sectors, the bargaining parties have concluded new collective agreements on partial retirement which contain various improvements in the existing regulations, such as:

  • the introduction of an individual right for employees to take partial retirement;
  • the extension of the possible partial retirement period;
  • the introduction of partial retirement for part-time employees or
  • the introduction of some financial compensation for employees' losses in statutory pension rights as a result of partial retirement.

In addition, in a few sectors new agreements have been concluded on an extension of supplementary pensions schemes. Finally, many sectoral agreements include new provisions on the promotion of vocational training and determine a certain period of time during which vocational trainees must be taken on at the end of their training. In many agreements, this period has been extended from six to 12 months.

Commentary

The results of the 2000 collective bargaining round should be seen against the background of recent specific developments in German industrial relations. In January 2000, the national "Alliance for Jobs" (Bündnis für Arbeit) adopted a joint statement on an "employment-oriented bargaining policy" (DE0001232F). This is the first time in German history that a national tripartite institution has issued recommendations for a forthcoming bargaining round. The Alliance's joint statement calls for a "longer-term collective bargaining policy" whereby the available "distributive margin" should be based on productivity and should be primarily used for job-creating agreements. In addition, the joint statement calls for job-creating early retirement on acceptable terms for the persons concerned.

Although, in legal terms, the Alliance's recommendations had only a non-binding character, because German collective bargaining is based on the principle of collective bargaining autonomy, they had de facto a strong political influence on the 2000 bargaining round. In the view of employers, the impact of the Alliance on the results of the recent collective bargaining round was very positive, since it applied pressure for a "return to moderate pay increases" after the unions had called for an "end of modesty" in the previous 1999 collective bargaining round (DE9810279F). Furthermore, the employers gave a positive response to the conclusion of "longer-term agreements" with a duration of mostly two years. By contrast, the unions emphasised the positive role of the Alliance in opening the door to new improved agreements on partial retirement, which are seen as an important contribution to promoting employment. At the same time, however, some voices within the unions have made critical remarks, suggesting that an important task of the Alliance has been to discipline the trade unions' pay policy. (Thorsten Schulten, Institute for Economic and Social Research (WSI))

Annex

Table 2. Selected collective agreements in the 2000 bargaining round
Date of agreement Branches (Region) Pay increases Duration of pay agreements Other issues
25 January 2000 Banking (DE0002236N and DE0003244N) Flat-rate payment of DEM 400; 1.5% pay increase from April 2000; 1.5% pay increase from August 2000. 12 months. Partial retirement; recruitment of vocational trainees at end of training.
22 March 2000 Chemical industry (west Germany)(DE0004255F) 2.2% pay increase from June 2000; 2.0% pay increase from June 2001. 21 months. Partial retirement; capital-forming payments and supplementary pensions scheme; recruitment of vocational trainees at end of training.
27 March 2000 Hotels and restaurants (Bavaria) 2.5% pay increase from April 2000. 12 months. -
28 March 2000 Metalworking (North Rhine Westphalia) (DE0004255F) Flat-rate payment of DEM 330 for March/April 2000; 3.0% pay increase from May 2000; 2.1% pay increase from May 2001. 24 months. Partial retirement; capital-forming payments; recruitment of vocational trainees at end of training.
30 March 2000 Construction industry (west Germany) (DE0005259N) 2.0% pay increase from April 2000; 1.6% pay increase from April 2001. 24 months. Partial retirement; introduction of a supplementary pensions scheme.
1 April 2000 Chemicals industry (east Germany) 2.8% pay increase from July 2000; 2.8% pay increase from July 2001. 21 months. Partial retirement; capital-forming payments and supplementary pensions scheme; recruitment of vocational trainees at end of training.
11 April 2000 Metalworking (east Germany) Flat-rate payment of DEM 330 for March/April 2000; 3.0% pay increase from May 2000; 2.1% pay increase from May 2001 24 months. Partial retirement; introduction of capital-forming payments; recruitment of vocational trainees at end of training.
4 May 2000 Insurance (DE0005258N) Flat-rate payment of DEM 200; 2.5% pay increase from May 2000. 13 months. Partial retirement; recruitment of vocational trainees at end of training.
11 May 2000 Printing industry (west Germany) (DE0006266N) 3.0% pay increase from April 2000; 2.5% pay increase from June 2001. 24 months. Partial retirement; recruitment of vocational trainees at end of training.
16 May 2000 Printing industry (east Germany) April to June 2000 are "zero months" without pay increase; 3.0% pay increase from July 2000; 2.5% pay increase from June 2001. 24 months. Partial retirement; recruitment of vocational trainees at end of training.
18/19 May 2000 Construction industry (east Germany) April 2000 to March 2001 are "zero months" without pay increase; 2% increase in minimum wage from September 2000; 1.4% pay increase from April 2001; 1.6% increase in minimum wage from September 2001. 24 months. Partial retirement; introduction of a supplementary pensions scheme; increase in holiday bonuses.
19 May 2000 Confectionery (North Rhine-Westphalia) Flat-rate payment of DEM 40; 2.8% pay increase from May 2000. 12 months. Recruitment of vocational trainees at end of training.
25 May 2000 Wholesale trade (North Rhine-Westphalia) 2.5% pay increase from April 2000; 2.8% pay increase from April 2001. 24 months. Increase in employers' contribution to supplementary pensions scheme.
1 June 2000 Deutsche Post AG 2.3% pay increase from April 2000; 2.3% pay increase from May 2001. 25 months. New employee stock options; recruitment of vocational trainees at end of training; working time reduction.
13 June 2000 Public services (DE0006268F) Flat-rate payment of DEM 400 for April to July 2000; 2.0% pay increase from August 2001; 2.4% pay increase from September 2001; adjustment of east German payments to west German pay levels - from 86.5% to 87% from August 2000, from 87% to 88.5% from January 2001 and from 88.5% to 90% from January 2002. 31 months (pay agreement); 33 months (adjustment agreement). Partial retirement; recruitment of vocational trainees at end of training.
20 June 2000 Iron and steel industry Flat-rate payment of DEM 1,000 for June/July 2000; 3.3% pay increase from August 2001; 2.2% pay increase from October 2001. 24 months. Partial retirement.
28 June 2000 Mining June 2000 is "zero month" without pay increase; flat-rate payment of DEM 50 for July 2000; 2.0% pay increase from August 2000. 14 months. Recruitment of vocational trainees at end of training.

Source: WSI Collective Agreement Archive 2000.

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