2002 collective bargaining round examined

In January 2003, the WSI research institute presented a report on Germany's 2002 collective bargaining round. The study evaluates collective agreements concluded in 2002, affecting about 80% of all employees covered by an agreement. The average increase in wages and salaries was 2.7% in 2002, which was somewhat higher than the increases of 2.1% in 2001 and 2.4% in 2000.

In January 2003, the Collective Agreement Archive (WSI-Tarifarchiv) of the Institute for Economic and Social Research (Wirtschafts- und Sozialwissenschaftliches Institut, WSI) within the Hans-Böckler Foundation published its report on the 2002 collective bargaining round (Tarifpolitscher Jahresbericht 2002: Harte Verteilungskonflikte, Reinhard Bispinck/WSI-Tarifarchiv, WSI Informationen zur Tarifpolitik, Düsseldorf, January 2003).

Collectively agreed pay increases

According to the WSI study, the average increase in wages and salaries stood at around 2.7% in 2002 (calculated on an annual basis), which was somewhat higher than the 2.1% increase recorded in 2001 (DE0201201F) and the 2.4% increase in 2000 - see table 1 below. The pay increases varied from sector to sector, between 1.8% in construction and 3.2% in the investment goods industry and raw material and production industries. The average increase in east German pay levels (2.9%) was slightly above the increase in west Germany (2.6%). Average collectively agreed pay in east Germany thus now amounts to around 92.8% of west German pay levels. Initially, the trade unions made claims in 2002 for pay increases of between 4% and 6.5% (DE0204201N).

Table 1: Annual increases in collectively agreed pay, by sector, 2000-2*
Sector 2002 2001 2000
Investment goods industry 3.2% 1.8% 2.6%
Raw material and production industries 3.2% 1.8% 2.5%
Consumption goods industry 2.8% 2.4% 2.5%
Commerce 2.7% 2.8% 3.0%
Food industry 2.6% 2.7% 2.8%
Banking, insurance 2.4% 3.2% 2.0%
Energy, water, mining 2.4% 1.3% 1.9%
Private services 2.4% 2.1% 2.3%
Trade and transport 2.4% 1.7% 2.3%
Horticulture, agriculture, forestry 2.3% 1.8% 2.3%
Public services 2.1% 1.8% 1.9%
Construction 1.8% 1.6% 1.6%
All sectors 2.7% 2.1% 2.4%

* Increases against the previous year.

Source: WSI Collective Agreement Archive 2003.

In 2002, trade unions affiliated to the German Federation of Trade Unions (Deutscher Gewerkschaftsbund, DGB) concluded new collective agreements for nearly 16.8 million employees, about 81% of all employees covered by a collective agreement. The first major sectoral agreements of the 2002 bargaining round were concluded in chemicals (DE0205204F), followed by new agreements in metalworking (DE0205206F). Both agreements set a benchmark for the negotiations in other sectors. Most sectoral agreements had a term much longer than 12 months - see table 2 below. The average duration of collective agreements signed in 2002 was 18.3 months.

Table 2. Selected pay agreements in the 2002 bargaining round
Date of agreement Branches (region) Pay increase Duration of the pay agreement
18 April 2002 Chemicals industry (west Germany) (DE0205204F) Flat-rate payment of EUR 85 for the first month; 3.3% for further 12 months. 13 months
25 April 2002 Hotels and restaurants (Bavaria) One 'zero month' with no pay increase; 2.75% from May 2002. 12 months
30 April 2002 Chemicals industry (east Germany) (DE0205204F) 3.3% from Many 2002; 2.8% from October 2002. 13 months
15 May 2002 Metalworking industry (pilot agreement in Baden-Württemberg) (DE0205206F) Two 'zero months' with no pay increase; flat-rate payment of EUR 120 for May 2002; 4.0% from June 2002; 3.1% from June 2003. 21 months
27 May 2002 Paper processing industry Flat-rate payment of EUR 30 for April 2002; 3.4% from May 2002. 12 months
29 May 2002 Printing industry (DE0206202N) Flat-rate payment of EUR 43 for April 2002; 3.4% from May 2002. 12 months
11 June 2002 Deutsche Post AG Flat-rate payment of EUR 43 for May 2002; 3.5% from June 2002; 3.2% from June 2003. 24 months
14 June 2002 Iron and steel industry (west Germany) (DE0207202N) Flat-rate payment of EUR 50 for June 2002; 3.6% from July 2002. 15 months
21 June 2002 Insurance (DE0207201N) Flat-rate payment of EUR 100 for June 2002; 3.5% from July 2002. 16 months
25 June 2002 Construction (west Germany) (DE0206204F) Two 'zero months' with no pay increase; flat-rate payment of EUR 225 for June to August 2002; 3.2% from September 2002; 2.4% from April 2003. 24 months
25 June 2002 Construction (east Germany) (DE0206204F) Five 'zero months' with no pay increase; 3.2% from September 2002; 2.4% from April 2003. 24 months
29 June 2002 Deutsche Telekom AG Two 'zero months' with no pay increase; 4.1% from July 2002; 3.2% from May 2003. 24 months
16 July 2002 Wholesale trade (Baden-Württemberg) Flat-rate payment of EUR 170 for April to June 2002; 3.1% from July 2002. 12 months
26 July 2002 Retail sector (Baden-Württemberg) (DE0209201N) Flat-rate payment of EUR 180 for April to July 2002; 3.1% from August 2002. 12 months
28 August 2002 Private transport (North Rhine Westphalia) One 'zero month' with no pay increase; 2.8% from September 2002; 2.0% from August 2003. 24 months
13 September 2002 Textiles and clothing industry (DE0210202N) 3.0% from October 2002; 2.7% from December 2003. 24 months
13 December 2002 Banking (DE0301202N) Two 'zero months' with no pay increase; 3.1% from July 2002; 2.0% from July 2003; 1.0% from January 2004. 25 months
9 January 2003 Public sector (DE0301204F) Flat-rate payment of 7.5% of a month’s pay; 2.4% from January 2003 for lower pay grades; 2.4% from April 2003 for higher pay grades; 1.0% from January 2004; 1.0% from May 2004. 27 months

Source: WSI Collective Agreement Archive 2003.

Other topics in 2002 bargaining

Although pay increases were at the core of the 2002 collective bargaining round, there were also some important agreements on other issues, such as performance-related variable pay and modernisation of pay frameworks.

Performance-related variable pay

In the 2002 collective bargaining round, the issue of performance-related pay became increasingly important. Germany's first major sectoral 'agreement on performance-related variable pay' was signed in banking, according to which companies can use up to 4% of collectively agreed annual basic pay for distribution as variable pay related to individual and/or company performance (DE0301202N). The introduction of such performance-related variable pay has to be regulated at establishment level on the basis of a works agreement concluded by management and works council. In addition, some sectoral agreements, for example in chemicals and banking, introduced a new performance-related pay component in collectively agreed annual bonus schemes.

Modernisation of pay framework

After several years of negotiations, the collective bargaining parties in metalworking agreed on a major modernisation of the pay framework agreement (DE0205206F). The introduction of a new pay framework agreement (Entgeltrahmen-Tarifvertrag, ERA) will lead to the abolition of the traditional distinction between blue- and white-collar workers in metalworking. Companies will have to introduce the new grading system by the end of 2007. The adjustment costs will be covered from the annual pay increases.

Other issues

Some trade unions demanded further working time reductions but, because of employers’ resistance, there were almost no changes in weekly or annual working time as a result of the 2002 collective bargaining round. The collectively agreed average working time stood at 37.7 hours per week, while there is still a significant difference between west Germany (37.4 hours per week) and east Germany (39.0 hours per week).

Although Europe's largest gaps in earnings between men and women are thought to be found in Germany (DE0211201N), wage discrimination and equal opportunities were virtually not an issue in the 2002 collective bargaining round.

Industrial action in 2002

The 2002 collective bargaining round was accompanied by a relatively high level of industrial action. Apart from several warning strike in various sectors, there were three major strikes which took place in metalworking (DE0205206F), construction (DE0206204F) and banking (DE0210203F).

In May 2002 the Metalworkers’ Union (IG Metall) organised a strike in the bargaining district of Baden-Württemberg and Berlin/Brandenburg. A strike ballot showed overwhelming support for industrial action from around 90% of IG Metall members. During 10 days of strike action, nearly 200,000 employees in more than 100 establishments participated in industrial action in Baden-Württemberg alone.

In June 2002, after the failure of negotiations on a new pay agreement in construction, the Building, Agricultural and Environmental Union (IG Bauen-Agrar-Umwelt, IG BAU) called a strike ballot of its members, which resulted in 98.63% support for a strike. The following seven days of strike were the first nationwide strike in the construction industry in Germany's post-war history. On the seventh day of the action, there were 32,600 workers on strike at 2,837 construction sites.

According to the Unified Service Sector Union (Vereinte Dienstleistungsgewerkschaft, ver.di) more than 70,000 employees participated in a strike in banking, where negotiations on new collective agreements were rather controversial and took more than half a year.

Commentary

The 2002 collective bargaining round was the first for many years in which the average agreed pay increase - of 2.7% - was able to exhaust the so called ‘cost-neutral margin of distribution’ (kostenneutraler Verteilungspielraum) composed by the sum of the year's 1.3% increase in consumer prices and 1.3% increase in labour productivity.

According to the Federal Statistical Office (Statistisches Bundesamt, Destais), however, actual gross wages and salaries rose only by 1.7% in 2002, which shows that Germany was faced by a notable 'negative wage drift' whereby actual pay increase are significantly below collectively agreed pay increases. Moreover, due to an increase in social security contributions net wages and salaries grew by only about 1.0%.

The rather small net pay increase has to be seen as a major reason for the extremely weak development of Germany’s domestic market. In 2002, German GDP grew only about 0.2%. Without the strong surplus of the German exports industry, however, the economy would have shrunk by 1.3%. Against the background of more than 4.5 million unemployed people, the strengthening of mass purchasing power seems to be an urgent precondition for overcoming Germany’s economic crisis. (Thorsten Schulten, Institute for Economic and Social Research, WSI)

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