Public sector employers' bargaining association collapses

In May 2003, the joint collective bargaining association for German public sector employers collapsed after more than 40 years. Representatives of the federal government and the federal states declared that they no longer see common ground for a bargaining association with the municipal employers. Furthermore, the federal states are no longer willing to accept the leadership of the federal government in future bargaining rounds in the public sector.

After more than 40 years, the 'joint bargaining association' (Tarifgemeinschaft) for the public sector, which united public employers at federal (national), state (Land) and municipal level, has collapsed. The split became public on 20 May 2003 when German newspapers reported that the federal minister of the interior, Otto Schily, representing the federal government, and the Bavarian minister of finance, Kurt Faltlhauser, representing the Employers' Association of German Länder (Tarifgemeinschaft deutscher Länder, TdL) had sent a letter to the Municipal Employers’ Association (Vereinigung kommunaler Arbeitgeberverbände, VKA). In this letter, they announced the termination of the joint bargaining association for public services because the municipal employers had recently signed a separate collective agreement with the Unified Service Sector Union (Vereinte Dienstleistungsgewerkschaft, ver.di) concerning occupational pension schemes.

Furthermore, TdL has declared that it will no longer accept the traditional role of the federal government as leader of the negotiations in public sector collective bargaining. In the future, TdL will only agree to form bargaining associations from time to time on an ad hoc basis.

These steps follow massive criticism from among the ranks of public employers over the most recent collective agreement for the public sector, which was signed in January 2003 (DE0301204F). A number of federal state (Land) and municipal employers had voiced concerns that the agreed wage increase was too high.

Interests within the public employers' camp are diverse because the federal, state and municipal levels are affected by personnel costs to different degrees. According to calculations by VKA, 58% of all public sector employees are employed at the municipal level, 34% at the state level and only 8% at the federal level. Furthermore, a great number of employees in the public services at federal and state level are career public servants (Beamte) who are not allowed to strike and whose pay is not determined by collective agreements but by the state through the Federal Career Public Service Pay Act (Bundesbesoldungsgesetz).

The joint bargaining association in the public sector had already begun to crumble when the city state of Berlin resigned from its membership of VKA and the Association of Employers in the Public Service (Vereinigung der Arbeitgeber des öffentlichen Dienstes, VadÖD) - a subsidiary employers' association at the state level which was created after Berlin left TdL in 1993 - even before the current collective agreement was signed in January 2003. Immediately after the settlement, other regional state governments threatened to follow the Berlin example and leave TdL. Therefore, TdL's announcements of the end of the joint bargaining association with the municipal employers and that it would no longer accept the leadership of the federal government can be considered as a move to save at least the bargaining association at state level.

TdL's move was welcomed both by state governments led by the Social Democratic Party (Sozialdemokratische Partei Deutschlands, SPD) and state governments led by the Christian Democratic Union (Christlich Demokratische Union, CDU).

TdL has also announced the termination of its collective agreement on Christmas and holiday bonuses, in order to negotiate lower bonus payments.

Ver.di heavily criticised the collapse of the joint bargaining association. The union deplored the employers' move, claiming that it violated the collective agreement of January 2003, in which all parties had agreed to enter into joint negotiations on the reform of basic collective bargaining rules.