New package of agreements for steel industry

In September 2006, the bargaining parties of the northwestern German steel industry agreed on a new package of collective agreements. Among the provisions of the new agreements are two one-off payments of €500 and €750 and a general pay increase of 3.8%, with effect from 1 January 2007. The parties also agreed on a new collective agreement on ‘demographic change’. The latter agreement obliges employers to review the age profile of their workforce in relation to job qualifications and working conditions; this assessment will then act as the basis for further consultations with the works council on occupational health and safety, working time schedules, further training and other related issues.

On 21 September 2006, the German Metalworkers’ Union (Industriegewerkschaft Metall, IG Metall) and the employers’ association for the German steel industry (Arbeitgeberverband Stahl) agreed on a new package of collective agreements, covering some 85,000 employees in the northwestern German steel industry of North Rhine-Westphalia, Lower Saxony and Bremen. Agreement was reached following a series of short warning strikes involving some 19,000 employees.

Provisions of new agreements

The pay element of the new package of agreements provides for two one-off payments of €500 and €750 and a general pay increase of 3.8%, with effect from 1 January 2007. The pay agreement has a duration of 17 months until 31 January 2008. Initially, IG Metall had demanded a 7% pay increase, while Arbeitgeberverband Stahl had offered a 3% rise and one lump-sum payment of €500, with the agreement covering a period of 19 months.

Along with the new pay provisions, the parties also agreed on a new collective agreement on ‘demographic change’, which will run until 31 January 2009. After consultation with the works council, each employer will be obliged to carry out a review at company level of the age profile of its workforce in connection with an assessment of qualification levels, the need for further training, and working conditions. The results of this review, including annexes, will be given to the works council, and the parties will then enter into consultation about the implications of the review and the possible measures that need to be taken. Such measures, as outlined in the agreement, could include the following provisions:

  • improving occupational health and safety;
  • adapting working conditions to cater for ageing workers;
  • offering further training;
  • reducing peak workloads;
  • adjusting working time schedules;
  • using long-term working time accounts for earlier retirement;
  • lowering the average age of the workforce by increasing the number of apprentices employed.

Works councils and employers may also agree to create a company fund to which the employer and employees can contribute. They may then agree on whether this fund is to be used for a company pension fund, for long-term working time accounts, for additional initiatives for early retirement, or for other similar measures.

Reactions to agreement

The Chair of IG Metall in North-Rhine Westphalia, Detlef Wetzel, emphasised that the trade union had succeeded in securing a better pay increase than in 2005 (DE0506202N). The Deputy Chair of IG Metall, Berthold Huber, added that the collective agreement represented an innovative step and would not only help older workers to reach retirement age in good health but would also offer new perspectives to younger workers.

The President of Arbeitgeberverband Stahl, Helmut Koch, underlined that both parties were aware that the agreement on demographic change would be a form of experiment. Despite the strong economic situation of the steel industry, the pay increase would be hard to absorb, although the long duration of the agreement would moderate the financial burden for employers.

Commentary

The agreed pay increase in the steel industry is above the rise agreed upon in the metalworking industry earlier this year (DE0605039I), and is well above that of agreements made in a number of other sectors during this year’s bargaining round (DE0608019I). IG Metall was in a somewhat more favourable situation in this instance, considering that even the employers themselves did not deny that the economic situation of the German steel industry was highly positive. It remains to be seen what practical effects the pay increase will have and whether the agreement on demographic change will set a precedent for similar agreements in other sectors.

Heiner Dribbusch, Institute of Economic and Social Research, WSI

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