Interim report on 1999 collective bargaining round

In July 1999, the WSI research institute presented an interim report on Germany's 1999 collective bargaining round. The study evaluates collective agreements concluded in the first half of 1999, affecting about two-thirds of all employees covered by an agreement. The average increase in wages and salaries will be around 3% in 1999, which is significantly higher than the average increase of only 1.8% in 1998.

In July 1999, 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 1999 collective bargaining round ("Die Drei vor dem Komma. Eine Zwischenbilanz der Lohn- und Gehaltsrunde 1999", Reinhard Bispinck/WSI-Tarifarchiv, WSI Informationen zur Tarifpolitik, Juli 1999). According to the WSI study, collective bargaining has almost exclusively concerned wages and salaries in 1999, with other issues playing only a minor role. This is mainly because trade unions have concentrated their demands very much on pay claims. After some years of only very moderate increases, which sometimes even included decreases in real pay, several unions called for an "end of modesty" and entered the 1999 bargaining round with pay claims between 5.5% and 6.5% (DE9810279F). Employers' associations, however, constantly rejected such demands and, instead, argued for a continuation of a policy of wage moderation.

One of 1999's first new collective agreements was signed in metalworking, and this became the clear trend-setter for the bargaining round. After more than 1 million employees had participated in warning strikes, the bargaining parties in metalworking concluded an agreement in February 1999 which provides for a 3.2% pay increase, plus a flat-rate payment of 1% of annual income (DE9903295F). In the following months, almost all other sectors more or less followed the target set by the metalworking agreement and concluded pay increases between 2.9% and 3.7% (see table 1). To sum up, in the first half of 1999, unions affiliated to the German Federation of Trade Unions (Deutscher Gewerkschaftsbund, DGB) negotiated an average pay increase of 3.1% for about two-thirds of all German employees covered by a collective agreement.

Table 1. Selected pay agreements in 1999 bargaining round
Date of agreement Branches (Region) Pay increase Other payments Term
1 December 1998 Chemical industry (east Germany) 3.7% - 12 months from 1 January 1999
1 February 1999 Deutscher Bahn AG (DE9905110N) 3.1% Flat-rate payment of DEM 320 for May-August 1999 12 months from 1 September 1999
18 February 1999 Metalworking (west Germany) (DE9903295F) 3.2% Flat-rate payment of DEM 350 for January and February 1999, plus flat-rate payment of 1% of annual income 12 months from 1 March 1999
25 February 1999 Automobile trade 3.0% - From 1 March 1999 for 12 months
27 February 1999 Public services (DE9903100F) 3.1% Flat-rate payment of DEM 300 for January-March 1999 12 months from 1 April 1999
28 February 1999 Deutsche Post AG (DE9903100F) 3.1% Flat-rate payment of DEM 500 for January-March 1999 12 months from 1 April 1999
1 March 1999 Deutsche Telekom AG (DE9903100F) 3.1% Flat-rate payment of DEM 300 for January-March 1999 From 1 April 1999 for 12 months
19 March 1999 Iron and steel industry (west Germany) 3.3% Flat-rate payment of DEM 500 for March-May 1999 12 months from 1 June 1999.
19/20 March 1999 Insurance (DE9904105F) 3.2% Flat-rate payment of DEM 350 for January-March 1999 12 months from 1 April 1999
30/31 March 1999 Energy industry (Northrhine-Westfalia) 3.1% Flat-rate payment of DEM 350 for April and May 1999 12 months from 1 June 1999
13 April 1999 Confectionery (Northrhine-Westfalia) 3.0% - 12 months from 1 April 1999
13 April 1999 Confectionery (Bavaria) 3.2% - 12 months from 1 April 1999
21/22 April 1999 Construction industry(DE9905109N) 2.9% - 12 months from 1 April 1999
6 May 1999 Printing industry (DE9905213N) 3.3% - 12 months from 1 April 1999
10 May 199 Paper processing 3.3% Flat-rate payment of DEM 75 for April 1999 11 months from 1 May 1999
12 May 199 Wholesale trade (Northrhine-Westfalia) 3.1% Flat-rate payment of DEM 120 for April and May 1999 10 months from 1 June 1999
26 May 1999 Textiles and clothing industry (west Germany) 3.1% Flat-rate payment of DEM 200 for May-July 1999 (clothing) and June-August 1999 (textiles) 12 months from 1 August and 1 September 1999
31 May 1999 Chemical industry (west Germany)(DE9906215N) 3.0% Flat-rate payment of DEM 200 for one month Regional differences: 13 months from 1 June, 1 July or 1 August 1999

Source: WSI collective agreement archive 1999.

Calculated on an annual basis, the average increase in remuneration is around 3%, varying between 2.0% and 3.7% (see table 2). Assuming a probable rate of inflation of 1% in 1999, many German employees will receive notable increases in real wages this year. In almost all sectors, the level of pay increase has been significantly higher in 1999 than in the previous year.

Table 2: Increases in collectively agreed remuneration, 1998-9
Sector 1999* 1998*
Investment goods industry 3.7% 1.8%
Private transport 3.1% 2.0%
Public services 3.1% 1.9%
Banking, insurance 3.1% 1.5%
All sectors 3.0% 1.8%
Retail and wholesale trade 2.9% 2.3%
Food industry 2.9% 2.0%
Consumption goods industry 2.8% 1.6%
Horticulture, agriculture, forestry 2.6% 2.0%
Raw materials 2.4% 2.1%
Private services 2.3% 1.5%
Energy, water, mining 2.1% 1.5%
Construction 2.0% 1.3%

* Increases against previous year. 1999 figures calculated on the basis of collective agreements in the first half of 1999 (up to 20 June).

Source: WSI collective agreement archive 1999.

Commentary

At first sight, 1999's collective bargaining can be regarded as a "classic" bargaining round. All agreements concern mainly wages and salaries and the agreed pay increases are very similar across the different sectors, following the pattern set by the metalworking industry. However, in comparison with developments in German collective bargaining during the 1990s, the 1999 bargaining round seems to be rather untypical, for at least two reasons:

  • after a long period of only moderate wage increases, it provides for a substantial increase in real wages; and
  • probably even more importantly, the 1999 bargaining round does not follow the pattern of "concession bargaining" observed in the previous bargaining round, when pay increases were possible only in exchange for a further flexibilisation of the bargaining system and substantial reductions in labour costs.

Unsurprisingly, the latter development has been very much criticised by employers' associations, which see the 1999 bargaining round as a sign of "stagnation" in the overall process of reforming the German bargaining system. They sharply criticise the withdrawal from a policy of wage moderation as well as the reintroduction of a "collective bargaining convoy", whereby all sectors follow the pattern of the metalworking industry.

On the trade union side, opinions are less unanimous. On one hand, several sectoral unions and in particular the IG Metall metalworkers' union, have called for a U-turn in German collective bargaining in order to withdraw from concession bargaining and guarantee a "fair share" for employees in the overall creation of wealth. On the other hand, DGB recently adopted a joint paper with the Confederation of German Employers' Associations (Bundesvereinigung der deutschen Arbeitgeberverbände, BDA) within the framework of the national "Alliance for jobs", in which both parties agree in principle to a further flexibilisation and decentralisation of the bargaining system as well as on the "priority use of productivity increases for employment"(DE9907219F). It is still rather unclear, however, what this means for the practice of pay policy, since there are still very different conceptions of the relationship between pay and employment. To sum up, only time will tell whether the 1999 bargaining round marks a U-turn or just a short intermezzo in German collective bargaining. (Thorsten Schulten, Institute for Economic and Social Research (WSI))

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