IG Metall suffers defeat over 35-hour week in east German metalworking

On 28 June 2003, the German Metalworkers' Union (IG Metall) called off a four-week strike in the eastern German metalworking industry, after failing in its attempts to negotiate a 35-hour working week (down from the current 38 hours) with employers' associations. The defeat of the strike is widely seen as a blow to IG Metall - which is now debating the implications - and for the German trade union movement.

On 28 June 2003, a dispute over the introduction of a 35-hour working week in the eastern German metalworking industry ended when the German Metalworkers' Union (Industriegewerkschaft Metall, IG Metall) called off a four-week after negotiations finally broke down without any agreement being reached. The negotiating parties on the employers' side were the federal employers' association for the German metalworking and electrical industry, Gesamtmetall, and two regional employers' associations for the metalworking industry in the eastern states (Länder) of Berlin, Brandenburg and Saxony - Verband der Metall- und Elektroindustrie in Berlin und Brandenburg (VME) and Verband der Sächsischen Metall- und Elektroindustrie (VSME).

Positions of IG Metall and the employers

IG Metall had demanded a three-hour reduction - without any corresponding cuts in pay - in the current 38-hour week in the eastern German metalworking, in order to bring it into line with western German metalworking (DE0211204F). The union argued that, 13 years after German unification, eastern workers should no longer be treated less favourably than their western colleagues. According to IG Metall, increased productivity indicated that this step was feasible, with productivity in some new eastern car plants even exceeding that of plants in western Germany. Furthermore, the 35-hour week was likely to secure jobs and stimulate new employment.

Employers rejected this demand, stating that a 35-hour week would remove one important incentive for employers to invest because it would remove part of the comparative cost advantage of eastern Germany. As employers' costs would increase, the reduction in working time would have a detrimental effect on employment, it was claimed. Employers stated that, prior to any reductions in working time, further increases in productivity were needed. Individual plants with above-average productivity compared with western Germany could not serve as a benchmark for the whole engineering sector.

Development of the dispute

In May 2002, the bargaining parties in the eastern German metalworking industry agreed to negotiate in 2003 a phased reduction of working time in order to bring it in line with the provisions of western German collective agreements. After IG Metall cancelled the existing collective agreements on working time in January 2003, several bargaining rounds followed but, despite several warning strikes held by IG Metall, the negotiations did not lead to a settlement. On 20 May 2003, the IG Metall executive committee decided to call a strike ballot of members in both the eastern German steel industry (where parallel negotiations were taking place) and the Saxony metalworking bargaining region. The ballot achieved the necessary three-quarters majority in favour of strike action, and strikes commenced on 2 June. The dispute was swiftly settled in the eastern German steel industry, after only four days of strike, with a new collective agreement on the introduction of the 35-hour week by 2009 (DE0307201N). The employers' associations in the metalworking industry, however, refused to accept a similar agreement. After another strike ballot in the eastern Berlin and Brandenburg metalworking bargaining region had received the necessary support from members, the union started strike action in this region as well on 17 June.

On 16 June, the chief negotiators for the employers' associations in the eastern German metalworking industry issued a joint statement, declaring that they would not agree to any reduction in working time which was contrary to 'the interests of the region'. Nine companies, however, broke ranks during the dispute and signed company agreement s on working time reduction with IG Metall.

Amongst the plants on strike were the eastern sites of the car manufacturer, Volkswagen, and a gearbox supplier producing parts for BMW's car factories. This caused Volkswagen to halt production of its best-selling Golf model in western Germany and BMW to lay off 10,000 workers in a number of western German factories, placing them on short-time working (Kurzarbeit) - ie they received no wages but instead a lower short-time allowance paid by the Federal Employment Service (Bundesanstalt für Arbeit, BfA).

At this stage, IG Metall came under increasing pressure from the media, which on the whole had been very critical of the trade union from the beginning of the dispute. Members of the government also expressed increasing concern that the strike would damage the whole economy. Matters became further complicated for IG Metall when some western German works council members in the car industry voiced concern about negative consequences if the strike lasted longer and more workers were laid off. The chair of the company works council at General Motors (GM) in Germany was even quoted in the press as calling for an immediate end to the strike.

IG Metall announced that it would increase efforts to find a compromise and negotiations involving the top leadership of the trade union and Gesamtmetall were held on 27 June.

Final offers

In the negotiations on 27 June, the trade union offered a phased-in reduction to 35 hours by 2009, with an 'opening clause' to allow the possible postponement of the 35-hour week to as late as 2011. The first step would have been the reduction of the current weekly working time of 38 hours by one hour with effect from 1 April 2004. The timetable for further reductions in the working week would have been negotiated at individual company level between employer and works council. Furthermore, the union offered the introduction of a so-called 'time corridor' ranging between 35 to 40 hours, with working time fixed within the range of this corridor by works agreement. Hours worked above 38 per week would have been saved in individual working time accounts.

The employers proposed that companies should be allowed to set weekly working time at between 35 and 40 hours, depending on their financial strength. They offered to reduce the standard working week on which basic remuneration is calculated to 37 hours by April 2005, which would have increased hourly remuneration by 2.7%. The proposed collective agreement would run until the end of 2008 without any further reduction in working time being fixed. Investors in the eastern German states were to be granted an additional 'bonus'- ie they would be allowed partially to deviate from the collective agreement.

On the morning of 28 June, after negotiations had finally broken down, IG Metall decided to call the strike off. 'The bitter truth is that the strike has failed,' stated the IG Metall chair, Klaus Zwickel, acknowledging that the union's leadership did not see any prospect of achieving its goals by further strike action. IG Metall last lost a strike in the mid-1950s. IG Metall's joint collective bargaining commission for Saxony, Berlin and Brandenburg ratified this decision on 29 June. The commission acknowledged that the political climate had increasingly turned against the union and denounced the head of the GM company works council for damaging the union's bargaining position by publicly calling for an end to the strike.

Prospects

Collectively agreed provisions retain their validity even when the collective agreement expires - as long as no new agreement is signed (a principle known as Nachwirkung) (DE9905200F). New recruits, however, can be offered individual employment contracts which deviate from the collectively agreed provisions. The trade union is free to return to industrial action as it is not bound by the 'peace obligation ' (Friedenspflicht) - a provision which forbids any form of industrial action during the duration of a collective agreement. In eastern German metalworking, however, both bargaining parties have announced their willingness to return to the status quo ante and to reinstate the cancelled collective agreement.

Immediately after the defeat, a debate started within IG Metall about what lessons are to be learned from the events. The future of the IG Metall vice-chair, Jürgen Peters, designated to follow Mr Zwickel as chair of the union in October 2003 and an advocate of the recent strike, remains in the balance. The union decided that the agenda for its national congress, which is scheduled for October 2003, will now be split. The delegates will meet in late August to discuss exclusively the most recent bargaining round and to elect the national executive board.

The VSME employers' organisation welcomed the defeat of the union's 35-hour week demand as a good signal to investors, and proposed to reinstate the old collective agreement and to postpone negotiations on working time to an 'appropriate' time point in the future.

Commentary

Industrial relations in the eastern German engineering sector were more adversarial than in the west before the dispute and this is unlikely to change in the near future. VSME in particular was regarded as 'tough' on trade unions and employers were less prepared to follow the kind of social partnership culture for which industrial relations in western Germany are known. This western German model of industrial relations evolved from a balance of power where trade unions had considerable organisational strength. In eastern German metalworking, however, overall trade union membership levels are lower, thus putting the trade union in a more difficult position. IG Metall will now have to analyse whether it underestimated employers' resistance to the 35-hour week or whether the chosen strategy and tactics were inappropriate.

The defeat of the IG Metall comes at a time when the German trade union movement is confronted with government plans for major cuts in the social security system (DE0303105F) and serious consideration by the government of legislative amendments in order to relax the monopoly of trade unions as sole negotiators of collective agreements (DE9905200F), by allowing the conclusion of works agreements which deviate from collective agreements without further mandatory consent of the higher-level bargaining parties. The outcome of the dispute hits the trade union movement at a time when it is on the defensive (DE0307107F) and the vulnerability displayed by IG Metall might well have implications for other sectors by encouraging employers to oppose more firmly trade union demands in the future. (Heiner Dribbusch, Institute for Economic and Social Research, WSI)

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