New collective agreements signed in banking

In December 2002, new collective agreements on pay increases, variable pay and other issues were concluded for Germany's private and public banks. For the first time, however, cooperative bank employers refused to sign joint agreements with the other parts of the industry.

On 13 December 2002, the Employers’ Association for Private Banking (Arbeitgeberverband des privaten Bankgewerbes, AGV Banken), the Collective Bargaining Community for Public Banks (Tarifgemeinschaft öffentlicher Banken) and the Unified Service Sector Union (Vereinte Dienstleistungsgewerkschaft, ver.di) concluded new collective agreements for about 215,000 employees in private banking and 75,000 employees in public banks. The agreements were reached after more than half a year of negotiations, which were accompanied by strikes involving about 70,000 banking employees (DE0210203F).

For the first time, the new banking agreements were not signed by the Employers’ Association for Cooperative Banks (Arbeitgeberverband der Deutschen Volksbanken und Raiffeisenbanken eV), which has called for separate agreements for the 170,000 or so employees in cooperative banks.

The new collective agreements in banking cover a wide range of issues, including new provisions on pay increases and variable pay, and an extension of existing provision on partial retirement, work on Saturdays and safeguarding employment (DE0106228N). The parties also agreed to establish a joint working group on further training in banking.

The new pay agreement runs (retrospectively) for 25 months from 1 May 2002 to 31 May 2004 and provides for:

  • two so-called 'zero-months' with no pay increase in May and June 2002;
  • a pay increase of 3.1% from 1 July 2002;
  • a pay increase of 2% from 1 July 2003; and
  • a pay increase of 1% from 1 January 2004.

Originally, ver.di had demanded a pay increase of 6.5% over 12 months.

Because the employers pushed very hard for the introduction of collectively agreed provisions on variable pay, after some resistance the union finally agreed to sign an 'agreement on performance-related variable pay' (Tarifvertrag zur leistungs- und/oder erfolgsorientierten variablen Vergütung), which is the first agreement on this issue to be concluded in banking. Under this agreement, banking companies now have the possibility to introduce performance-related variable pay on the basis of a works agreement concluded by management and works council. Companies can use up to 4% of collectively agreed annual basic pay for distribution as variable pay. In addition, the company must provide an extra budget for variable pay. The variable pay can be related to individual and/or company performance. All concrete provisions on variable pay must be laid down in the relevant works agreement.

Furthermore, the collective bargaining parties agreed to introduce a performance-related component into the collectively agreed annual bonus, which in banking takes the form of a so-called 13th month's salary. The management and the works council are now allowed to conclude a works agreement whereby this annual bonus can be reduced to 94% of one month's pay in difficult economic situations and increased to 112% in times of good performance.

For the banking employers, the new agreements on variable pay constitute a 'milestone' in the modernisation of collective agreements. By contrast, ver.di is not enthusiastic about the introduction of variable pay but emphasises that it was able to refuse the more far-reaching demands of the banking employers, which originally called for up to 35% of collectively agreed fixed pay to be converted into variable pay.

The cooperative banks employers refused to sign the agreements, because they see the provisions on variable pay as still being too restrictive. Instead, the cooperative banks have called for the introduction of a general 'opening clause' into the banking sector agreements, allowing companies in economic difficulties to diverge from collectively agreed standards.

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