Interim report on 2006 collective bargaining round

In July 2006, the Institute of Economic and Social Research presented its interim report on Germany’s 2006 round of collective bargaining. The study evaluates the collective agreements concluded in the first half of 2006, affecting about 39% of all employees covered by such agreements. Calculated on an annual basis, the average increase in wages and salaries will be around 1.5% in 2006, which is below the average pay increase of 1.8% in 2005.

In July 2006, the Collective Agreement Archive (Tarifarchiv) of the Institute for Economic and Social Research (Wirtschafts- und Sozialwissenschaftliches Institut, WSI) within the Hans Böckler Foundation (Hans-Böckler-Stiftung, HBS) published its interim report (in German, 347Kb PDF) on the 2006 collective bargaining round. The study evaluates all collective agreements concluded by trade unions affiliated to the Confederation of German Trade Unions (Deutscher Gewerkschaftsbund, DGB) in the first half of 2006. These new collective agreements cover 7.6 million employees, which accounts for 39% of all employees covered by collective agreements.

Calculated on an annual basis, the average pay increase of wages based on collective agreements for 2006 will be around 1.5%, which is below the average increase of 1.8% in 2005 (DE0508203F). This calculation includes all pay increases coming into effect in 2006, including those collectively agreed in previous years. The average increase in eastern German pay levels is also estimated to be about 1.5%, thereby bringing this year’s increases to the same level as in western Germany (Table 1). Average collectively agreed pay in eastern Germany will amount to around 94.7% of average western German pay levels in 2006, which is 0.1 percentage point above the level reached at the end of 2005 (DE0602205F).

Table 1: Annual increases in collectively agreed pay (%), by sector, 2006*
Average pay increases in wages based on collective agreements in various economic sectors calculated on an annual basis for 2006.
Sector Western Germany Eastern Germany Germany
Horticulture, agriculture, forestry 1.0 1.5 1.3
Energy, water, mining 1.7 2.1 1.9
Raw materials and production industries 2.7 4.0 1.9
Investment goods industry 2.4 2.4 2.4
Consumption goods industry 1.4 1.2 1.4
Food industry 1.9 1.9 1.9
Construction industry 0.6 0.8 0.6
Commerce 0.9 0.7 0.9
Transport and communications 1.8 3.7 2.3
Financial services (banking, insurance) 2.1 2.1 2.1
Private services, non-profit associations 1.0 1.4 1.1
Public services, social security 0.3 1.0 0.5
All sectors 1.5 1.5 1.5

Notes: *Annual pay increase in 2006 compared to 2005. Figures are calculated on the basis of all pay increases coming into effect in 2006, collectively agreed either in the first half of 2006 or in previous years.

Source: WSI Collective Agreement Archive 2006 (as at 20 June 2006)

Main settlements

On 4 January 2006, after six months of negotiations, the bargaining parties in retail – the United Services Union (Vereinte Dienstleistungsgewerkschaft, ver.di), the Employers’ Association for the Retail Trade (Hauptverband des Deutschen Einzelhandels, HDE) and the Joint Federation of Large and Medium-sized Retail Employers (Bundesarbeitsgemeinschaft der Mittel- und Großbetriebe des Einzelhandels, BAG) – reached a new collective agreement for the Berlin bargaining region (DE0602201N). Both parties regarded the outcome as a pilot agreement for other bargaining regions. The new collective agreement will run for 24 months until 30 June 2007. It includes 17 so-called zero-months with no increases. Employees in the retail industry will receive a general pay increase of 1% with effect from 1 December 2006. They will receive a lump-sum payment of €200 in April 2006 and a second payment of €75 in April 2007.

On 5 April 2006, ver.di and the Municipal Employers’ Association of Baden-Württemberg (Kommunaler Arbeitgeberverband Baden-Württemberg, KAV Baden-Württemberg) signed a new collective agreement on working time (DE0605019I). The agreement, which took effect from 1 May 2006, stipulates that the standard weekly working time of municipal employees in Baden-Württemberg will increase by half an hour, from 38.5 hours to 39 hours, and not to 40 hours as was originally demanded by employers. In addition, part-time employees will be allowed to adapt their weekly working time to avoid income losses, while apprentices and trainees will be able to maintain their 38.5-hour working week. The new agreement, which runs until 31 December 2009, covers some 200,000 municipal employees in the public services sector of Baden-Württemberg. The agreement came after nine weeks of strike action – the longest strike in the German public services sector to date.

On 22 April 2006, the German Metalworkers’ Union (Industriegewerkschaft Metall, IG Metall) and the employer association for the metal and electrical industries in North Rhine-Westphalia (Verband der Metall- und Elektro-Industrie Nordrhein-Westfalen, Metall NRW) reached new collective agreements covering pay and continuous training (DE0605039I). The agreement followed a series of warning strikes which involved several hundred thousand employees. The settlement, which was subsequently adopted as a ‘pilot agreement’ in the industry’s other bargaining regions, provides for a pay increase of 3% with effect from June 2006, and a lump-sum payment of €310 for employees. As part of the compromise, it was agreed that works councils and employers can agree at company level either to increase or decrease this lump-sum payment according to the company’s economic situation. The bargaining parties also concluded a new collective agreement on continuous training.

Other collective agreements concluded in the first half of 2006 included those in sectors such as textiles and construction (see Table 2).

Table 2: Selected pay agreements concluded up to July 2006
Selected collective agreements concluded up to July 2006
Date Sector and region Main provisions
17 February 2006 Automobile crafts, North Rhine-Westphalia 10 ‘zero months’ (July – December 2005) with no pay increase followed by a one-off payment of €160. General pay increase of 2.2% with effect from 1 March 2006; duration until 28 February 2007.
1 March 2006 Paper processing industry, Western Germany 12 ‘zero months’ (April 2005 – March 2006) with no pay increase; general pay increase of 1.5% with effect from 1 April 2006; one-off payment of €150 in August 2006; general pay increase of 2% with effect from April 2007; duration until 31 March 2008.
11 April 2006 Hotel and restaurants, North Rhine-Westphalia One ‘zero month’ (April 2006) with no pay increase; 1.5% with effect from 1 May 2006 and 1.4% with effect from 1 May 2007; duration until 31 March 2008.
12 May 2006 Textiles and clothing industry, western Germany One-off payment of €340 covering the period between May and October 2006; general pay increases of 2.5% with effect from 1 November 2006 and 2% with effect from 1 May 2007; duration until 29 February 2008.
13 May 2006 Deutsche Post (German post) One-off payment of €250 covering May to October 2006; pay increases of 3% with effect from 1 November 2006 and 2.5% with effect from 1 November 2007; duration until 30 April 2008.
17 May 2006 Wood and plastics processing industry, Bremen, Lower Saxony One ‘zero month’ (May 2006); one-off payment of €350 covering June to October 2006; pay increase of 2.5% with effect from 1 November 2006; duration until 30 April 2007.
20 May 2006 Public services (federal states) One-off payments of €150, €100 and €50 according to pay grade (low pay grades receive highest one-off payment) in July 2006; €310/€210/€60 in January 2007; €450/€300/€100 in September 2007; general pay increase of 2.9% with effect from 1 January 2008 (western Germany)/1 May 2008 (eastern Germany); duration until 31 December 2008.
2 June 2006 Deutsche Telekom One-off payment of €350 covering April to October 2006.
22 June 2006 Banking (without cooperative banks) One-off payment of €100 covering June to August 2006; pay increases of 3% with effect from 1 September 2006 and 1.5% with effect from 1 December 2007; duration until 30 June 2008.

Source: WSI Collective Agreement Archive, July 2006

Gender pay gap

Although a considerable gap in earnings between men and women continues to exist in Germany (DE0604019I), special provisions to tackle wage discrimination and to promote equal opportunities were not included in those collective agreements concluded in the first half of 2006.

Commentary

Collective bargaining in the first half of 2006 was overshadowed by the disputes on working time in the public sector which triggered the longest strikes ever in the public service. Apart from these conflicts, the 2006 bargaining round was also a classic pay round. In the metalworking industry, but also in a number of other industries, the agreed general pay increases were above those concluded in recent years. However, the average pay increase of collectively agreed wages in 2006 is likely to be even below that of 2005 due to two reasons: first, a number of collective agreements concluded in the first half of 2006 will not come into effect until later in the year; secondly, some of the comparatively low pay increases agreed in previous years did come into effect in 2006.

Heiner Dribbusch, Institute for Economic and Social Research (WSI)

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