Alliance for Jobs adopts joint statement on employment-oriented bargaining policy

In December 1999 and January 2000, Germany's tripartite "Alliance for Jobs" held new top-level talks which concentrated mainly on collective bargaining policy. In a joint statement, the Alliance concluded recommendations for the 2000 collective bargaining round. The subsequent announcement of the social partners' bargaining demands, however, has suggested that the Alliance's statement is based on an insubstantial compromise, while trade unions and employers' associations continue to have relatively opposed views on what constitutes an employment-oriented collective bargaining policy.

On 12 December 1999, leading representatives of the federal government, trade unions and employers' and business associations met officially for the fourth round of top-level talks within the framework of the "Alliance for Jobs, Training and Competitiveness" (Bündnis für Arbeit, Ausbildung und Wettbewerbsfähigkeit). The alliance was established in December 1998 as a new permanent tripartite arrangement at national level, involving various issue-related working groups as well as regular top-level talks between the leading representatives of all three parties (DE9812286N).

At the December meeting the government, trade unions and employers' associations drew first conclusions on the Alliance's earlier activities and determined its future priorities. In a joint statement, all parties involved agreed that the first year of the Alliance had brought some important results which now have to be developed further in order to guarantee a continuous increase in employment. The joint statement places particular emphasis on the "consensus on career training" (Ausbildungskonsens), which was adopted by the Alliance in July 1999 with the aim that "every young person who is willing and able will be trained" (DE9907219F). As a result of that agreement, local representatives of all three parties have held regional conferences on career training in all 181 Labour Office districts, thereby contributing to a better placement of young persons seeking vocational training. As for the future, trade unions and employers' associations agreed on a further modernisation of the German vocational training system and the creation of new occupations for trainees.

Another important aspect discussed at the Alliance's December meeting was the promotion of employment opportunities for low-skilled workers and long-term unemployed people. In spring 1999, the Alliance's working group on "benchmarking" presented a comprehensive concept for the promotion of a "low-wage sector" of employment by subsidising social security contributions up to certain wage level. After this concept was rejected (for various reasons) by both trade unions and employers' associations, the Alliance has now agreed to conduct four regional pilot trials (Modellversuch) on the promotion of employment for low-skilled workers by using different types of public pay subsidies in the low-wage sector.

The most prominent issue within the Alliance's top-level talks was, however, the role of an "employment-oriented collective bargaining policy" (beschäftigungsorientierte Tarifpolitik). At the previous top-level meeting of the Alliance in July 1999, the German Federation of Trade Unions (Deutscher Gewerkschaftsbund, DGB) and the Confederation of German Employers' Associations (Bundesvereinigung der deutschen Arbeitgeberverbände, BDA) presented a joint declaration which contains common viewpoints on various principles of future collective bargaining policy (DE9907219F). As the ensuing interpretations of that declaration highlighted differing viewpoints between employers' associations and trade unions, the Alliance's December meeting failed to reach a joint statement on the forthcoming 2000 collective bargaining round.

The two sides indeed have rather different ideas of what constitutes an "employment-oriented collective bargaining policy". For the employers' associations, the most important point has always been whether or not the Alliance would be able to promote a stable and long-term oriented collective bargaining policy with moderate wage increases allowing a further reduction in labour costs. The trade unions have put the emphasis on an improved redistribution of work through different forms of working time reduction, with the focus currently very much on the introduction of new early retirement schemes. In particular, the IG Metall metalworkers' union has been campaigning very intensively for a new collectively agreed scheme for early retirement at 60 and has put this on the agenda of the Alliance. The employers, however, have always sharply rejected the IG Metall proposal (DE9910217F).

Joint statement on an employment-oriented collective bargaining policy

Just before some of the major trade unions had planned to present their demands for the 2000 collective bargaining round, another top-level meeting within the Alliance took place on 9 January 2000, where all parties involved finally agreed on a compromise paper regarding collective bargaining policy - reproduced in the annex to this feature.

In the document, the Alliance recommends a longer-term and employment-oriented collective bargaining policy, whereby the available "distributive margin" (Verteilungsspielraum) should be based on productivity growth 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. The collective bargaining parties are asked to find sector- and company-specific settlements while the government agrees to improve the legal framework conditions for early and partial retirement.

In a first reaction to the new Alliance paper, the Federal Chancellor, Gerhard Schröder, called it a "breakthrough" for the Alliance which has created the necessary requirements so that the forthcoming 2000 collective bargaining round "will not be only about wage increases but also about job-creating measures". Mr Schröder expressed his hopes that forthcoming collective bargaining would lead to an "employment bridge" (Beschäftigungsbrücke) through which older employees on early retirement would be replaced by young job-seekers.

The president of BDA, Dieter Hundt, said that this was the first time that in the run-up to a collective bargaining round employers' associations and trade unions had agreed on a distributive margin oriented to increases in productivity. He positively highlighted the fact that collective bargaining in 2000 will not only be about wages and will aim for agreements of long-term duration. Finally, Mr Hundt emphasised that there will be company- and sector-specific agreements on early retirement and that, therefore, the IG Metall proposal for early retirement at 60 would be "off the table".

Overall, the reactions from the trade union side were more reserved. While all unions welcomed the fact that a compromise has been reached and that the new Alliance paper recognises the need for new regulations on partial and early retirement, there were also many rather sceptical views within the unions. For example, the president of the food and restaurant workers' union (Nahrung Genuss Gaststätten, NGG), Franz-Josef Möllenberg, declared that for him the new Alliance statement did not represent a "breakthrough" towards a new collective bargaining policy. The president of the IG Medien media workers' trade union, Detlef Hensche, said that he could not see any progress for unemployed people since the Alliance paper contained mainly insubstantial compromises. For Mr Hensche, the Alliance seems to represent increasingly a form of "symbolic politics" whereby the "the appearance matters more than the content."

Controversies over the 2000 collective bargaining round

On 11 January 1999, the IG Metall executive board presented its recommendations for the 2000 collective bargaining round, recommending its regional bargaining commissions to submit a claim of up to 5.5% which should finance both pay increases and the introduction of early retirement at 60. IG Metall justified its demands on the grounds of an assumed increase in prices of 1.5%, a predicted increase in productivity of 3.5% and the high profits within the metalworking industry. The president of IG Metall, Klaus Zwickel, declared that the proposed demand "is at the lower limit of what has been discussed among shopfloor members". In the following weeks, many other sectoral trade unions also set out their bargaining claims, mostly for increases of between 4% and 5.5%.

The employers' associations, however, sharply criticised the unions' demands as being "in flagrant contradiction" of the Alliance's recent statement. Since the Alliance had limited the distributive margin to the increase in productivity, for the Gesamtmetall metalworking employers' association the negotiable margin in current collective bargaining is at best 2.6%, which was the figure for productivity growth predicted by the Council of Economic Experts (Sachverständigtenrat) in autumn 1999. The president of Gesamtmetall, Werner Stumpfe, stated that it was not in accordance with the Alliance to use components other than productivity (such as inflation or even redistribution) to justify bargaining demands. Mr Stumpfe said that the forthcoming bargaining round in metalworking would lead to long-term agreements with a duration of at least three years. In order to promote employment, the pay increases should be below the rate of productivity increase and should contain a company performance-related component, such as a performance-related Christmas bonus. While Gesamtmetall has again clearly rejected the IG Metall model for early retirement at 60, the metalworking employers seem to be open to company-specific early retirement schemes, which, however, also have to be financed within the distributive margin.

In response to the employers' criticisms, most unions have stated that they do not see a contradiction between the Alliance and their bargaining policy. Although price increases were not explicitly mentioned in the Alliance's declaration, the unions have always taken the view that inflation has to be compensated and, therefore, have implicitly related Alliance's definition of a distributive margin to the development of real wages. Furthermore, union representatives emphasised that the question of whether or not forthcoming collective bargaining would be in accordance with the Alliance's principles could be answered only after knowing the final bargaining results.

The sharp controversies on the 2000 collective bargaining round led to some strong criticism of the Alliance within the employers' camp. For example, the president of the construction industry employers' association (Hauptverband der deutschen Bauindustrie, HDB), Ignatz Walter, called the way in which the Alliance is currently working a "farce", in which "the unions are pulling the employers' leg." The president of the wholesale trade employers' association (Bundesverband des deutschen Groß- und Außenhandels), Michael Fuchs, argued in the same direction when he criticised the "insubstantial compromise papers of the Alliance". Strong criticism also came from representatives of small and medium-sized companies. The president of the Central Association of German Crafts (Zentralverband des deutschen Handwerks), Dieter Philipp, who has been one of the employers' representatives with the Alliance's top-level talks, did not support the recent statement on collective bargaining policy, because "it refers mainly to large-scale enterprises."


As a result of the recent rounds of top-level talks, collective bargaining policy has moved to the centre of the Alliance for Jobs' work. This is a remarkable fact in itself, since Germany has a very strong tradition of collective bargaining autonomy and the trade unions in particular were initially rather reserved about accepting any form of "bargaining guidelines" within the Alliance. The recently adopted statement on an employment-oriented collective bargaining policy, however, constitutes a typical case of an insubstantial compromise. Both employers' associations and trade unions continue to have rather contrary views on the way in which collective bargaining could promote employment.

For the employers, it is a fundamental point that only moderate wage developments, more flexible and decentralised bargaining and long-term agreements can contribute to the creation of employment. Therefore, it has always been their primary aim to use the Alliance to oblige the unions to follow a policy of wage restraint. On the other hand, in the unions' view collective bargaining can promote employment mainly through working time reductions and an improved distribution of work. Therefore, for them the Alliance is - as Klaus Lang of the IG Metall leadership put it - "a test of whether or not a redistribution of work is possible with consensus".

Although the new Alliance statement tries to find a compromise between these conflicting views on the basis of a possible exchange of wage restraint for working time reduction, it is not at all surprising that at the beginning of a collective bargaining round both sides should try to promote their views and interests. If the employers are now arguing that the future of the Alliance will depend on the outcome of the next bargaining round, this might be understandable as a tactical argument to strengthen their positions in the bargaining process. Nevertheless, it cannot be accepted as a substantial argument, since the German social pact will have a long-term perspective only when it learns to sustain fundamental conflicts of interests. (Thorsten Schulten, Institute for Economic and Social Research, WSI)

Document: Joint statement by the Alliance for Jobs, Training and Competitiveness on the results of its fifth top-level meeting on 9 January 2000

The participants in the Alliance for Jobs, Training and Competitiveness met today under the chairmanship of Chancellor Gerhard Schröder for their fifth top-level meeting. In this connection representatives of labour, management and government made the following statement:

At the last top-level meeting an agreement was reached on the future focuses of the Alliance for Jobs, the prospects for a consensus on training, and the promotion of employment opportunities for low-skilled workers and the long-term unemployed; this meeting continued a discussion of job-creating wage policies [EIROnote: The original German version uses the termTarifpolitik, which in fact means more than"wage policy"and might be better translated by"collective bargaining policy"]. The following agreement was reached:

Positive prospects for the economy, relief provided and further relief planned in taxes and social security, as well as stable price trends provide a favourable basis for wage policy being able to help bring about a strong and sustained reduction of unemployment in Germany. The partners in the Alliance discussed key economic data relating to productivity, wages, profits and price stability.

On the basis of the still valid Joint Statement by the Confederation of German Employers' Associations (BDA) and the German Trade Union Federation (DGB) of 6 July 1999 the participants in the Alliance for Jobs, Training and Competition recommended discussing a longer-term employment-oriented wage policy at the forthcoming round of wage talks in 2000. The available margin for wage increases based on productivity growth will be used primarily for job-creating agreements. The labour and management organisations responsible in each case will agree on necessary sector-related adjustments in their own areas.

In this connection ways will be found to make possible job-creating early retirement for long-time social security insurees on acceptable terms for the persons concerned without creating additional burdens for the social security system. Labour and management will seek to achieve employer- and sector-specific settlements. This includes early retirement as well as increased use of the part-time employment option for older workers.

With these measures the participants in the Alliance for Jobs, Training and Competitiveness want to create a rapidly effective contribution to fighting unemployment. It is their assumption that a high rate of re-employment will be striven for and that an excessive burden on small and medium-sized enterprises will be ruled out in this context. The details will have to and will be worked out in talks between labour and management. The government, for its part, will create additional time-limited legal prerequisites for the implementation of agreements of this kind.

The government will also make amendments to the Older Worker Part-Time Employment Act; these amendments are intended to increase the job-creating effectiveness of this legislation and will extend its period of effectiveness.

The aim is also to make use of available latitude for the creation of modern instruments for policy on working times. Over the course of the next two years labour and management will make the proposals that emerge from the debate on working time accounts a subject of wage agreements. The partners in the Alliance for Jobs will seek to increase the attractiveness of part-time work. A working group on policy on working times will formulate proposals in this regard.

It is the assumption of the participants in the Alliance for Jobs that with the implementation of this agreement important steps will have been taken towards achieving more employment and improved competitiveness of the German economy.

Source: Federal government press release of 10 January 2000, translated by the federal government's press office.

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