2005 collective bargaining round examined

Dribbusch, Heiner

Overview

Article

2005 collective bargaining round examined

Published: 19 February 2006

In February 2005, the Collective Agreement Archive (WSI-Tarifarchiv) of the Institute for Economic and Social Research (Wirtschafts- und Sozialwissenschaftliches Institut, WSI) within the Hans Böckler Foundation (Hans Böckler Stiftung) published its report [1] on the 2005 collective bargaining round. The study evaluates collective agreements concluded in 2005, affecting some 7.3 million employees, or about 38% of all employees covered by a collective agreement. Another 5.7 million employees received pay increases in 2005 that had already been agreed in previous years. In 2005, the trade unions initially made claims for pay increases of between 3.5% and 4.0%, the exception being the German Metalworkers’ Union (Industriegewerkschaft Metall, IG Metall), which demanded 6.5% in the steel industry. Employers in return demanded more wage and working time flexibility and in several sectors also demanded that trade unions agree to an extension of weekly working time.[1] http://www.boeckler.de/cps/rde/xchg/SID-3D0AB75D-D32A90F6/hbs/hs.xsl/16674.html

In February 2006, the WSI research institute presented its annual report on Germany's 2005 collective bargaining round. The study evaluates collective agreements concluded in 2005, affecting some 7.3 million employees, or 38% of all those covered by a collective agreement. Another 5.7 million employees received pay increases in 2005 which had already been agreed in previous years. The average increase in wages and salaries was 1.6% in 2005, which was below the 2.0% increase of the previous year. According to the Federal Statistical Office, however, actual gross wages and salaries rose only by 0.5% in 2005.

In February 2005, the Collective Agreement Archive (WSI-Tarifarchiv) of the Institute for Economic and Social Research (Wirtschafts- und Sozialwissenschaftliches Institut, WSI) within the Hans Böckler Foundation (Hans Böckler Stiftung) published its report on the 2005 collective bargaining round. The study evaluates collective agreements concluded in 2005, affecting some 7.3 million employees, or about 38% of all employees covered by a collective agreement. Another 5.7 million employees received pay increases in 2005 that had already been agreed in previous years. In 2005, the trade unions initially made claims for pay increases of between 3.5% and 4.0%, the exception being the German Metalworkers’ Union (Industriegewerkschaft Metall, IG Metall), which demanded 6.5% in the steel industry. Employers in return demanded more wage and working time flexibility and in several sectors also demanded that trade unions agree to an extension of weekly working time.

Collectively agreed pay increases

According to the WSI study, the average increase in wages and salaries in 2005 was 1.6% (calculated on an annual basis), which was lower than the 2.0% increase recorded in 2004 (DE0502202F) - see table 1 below. The pay increases varied from sector to sector, between 0.5% in construction and 2.0% in the raw material and production sector. Unlike in previous years, the average increase in eastern German pay levels was at an equal level of 1.6%, rather than being higher than in the west. Average collectively agreed pay in eastern Germany thus now amounts to around 94.6% of western German pay levels (94% in 2004).

Table 1. Annual increases in collectively agreed pay, by sector, 2001-5*
Sector	2005	2004	2003	2002	2001
Construction	0.5%	2.4%	3.0%	1.8%	1.6%
Food industry	1.8%	1.9%	2.7%	2.6%	2.7%
Transport and communication	1.9%	2.2%	2.6%	2.4%	1.7%
Raw material and production industries	2.0%	2.1%	2.5%	3.2%	1.8%
Horticulture, agriculture and forestry	0.8%	1.7%	2.5%	2.3%	1.8%
Investment goods industry	1.8%	2.3%	2.4%	3.2%	1.8%
Consumption goods industry	1.5%	2.1%	2.3%	2.8%	2.4%
Commerce	1.7%	1.8%	2.2%	2.7%	2.8%
Energy, water and mining	1.8%	1.7%	2.2%	2.4%	1.3%
Private services and not-for-profit sector	1.6%	1.9%	2.2%	2.4%	2.1%
Banking, insurance	1.7%	2.4%	2.1%	2.4%	3.2%
All sectors	1.6%	2.0%	2.5%	2.7%	2.1%

* Increases against the previous year; .

Source: WSI Collective Agreement Archive 2006.

According to the Federal Statistical Office (Statistisches Bundesamt, Destatis) actual gross wages and salaries rose by 0.5% in 2005.

The trend towards collective agreements having a duration of longer than 12 months accelerated in 2005. The average duration of collective agreements on pay signed in 2005 was 25.7 months (21.8 months in 2004). In eastern Germany, the duration of collective agreements tends to be longer than in the western German bargaining areas - see table 2 below.

**Table 2. Average duration of collective agreements (in months)**
.	1995	1996	1997	1998	1999	2000	2001	2002	2003	2004	2005
Western Germany	15.1	16.2	16.8	12.7	13.8	21.5	14.1	18.1	20.4	21.8	25.2
Eastern Germany	.	.	.	.	14.7	23.3	16.4	19.7	21.0	22.0	28.4

Source: WSI Collective Bargaining Archive.

Many collective agreements contained so-called zero months, ie months within the duration of the collective agreements in which the agreed pay increase is delayed - see table 3 below.

**Table 3. Selected pay agreements in 2005 bargaining round**
Date	Sector	Provisions
9 February 2005	Public sector, federal government and local authorities (West) (DE0503203F)	Lump-sum payments of EUR 300 in 2005, 2006 and 2007
9 February 2005		New uniform grading system for all employees
28 February	Deutsche Bahn AG (German Rail) (DE0504205F)	4 zero months (March-June 2005)
		Lump-sum payments of EUR 50 for each month between July 2005 and June 2007
		1.9% pay increase from 30 June 2007
3 May	Textiles industry (Eastern Germany)	EUR 400 lump-sum payment for period from May 2005 to October 2006; 1.8% increase with effect from October 2006
11 May	Steel industry (West) (DE0506202N)	EUR 500 lump-sum payment for period April 2005 to August 2005; 3.5% increase with effect from September 2005
16 June	Printing industry (DE0507204F)	EUR 340 lump-sum payment for period from April 2005 to March 2006; 1% increase with effect from April 2006
16 June	Chemicals industry (West) (DE0507202N)	2.7% for 19 months starting on June, July or August 2005 depending on region; lump-sum payment worth 1.2% of wage
21 June	Construction industry	Following 17 (eastern Germany: 24) zero months, lump-sum payments worth EUR 30 for each month from September 2005 to March 2006; 1% increase with effect from April 2006
22 December	Private insurance (DE0602202N)	EUR 250 lump-sum payment for period from October 2005 to March 2006; 2% increase with effect from April 2006; 1% increase with effect from April 2007

Source: WSI Collective Bargaining Archive.

Working time and other issues

Although pay increases were at the core of the 2005 collective bargaining round, there were also some important agreements on working time issues. In construction and at German Rail (Deutsche Bahn AG) trade unions had to agree to an extension of standard weekly working time. At German Rail the working time was extended by one hour from 38 to 39 hours with effect from July 2005 and in construction the bargaining parties agreed to an extension of the standard working time from 39 to 40 hours with effect from 1 January 2006.

After years of negotiations, the bargaining parties in the public sector at federal and local level agreed on a new uniform general framework collective agreement for blue- and white-collar employees (DE0503203F). The deal includes a new uniform pay framework for both blue- and white-collar employees in the public service at federal and municipal level. The 2.1 million public sector workers covered by the deal will receive one-off payments of EUR 300 in each of the next three years, but the agreement does not contain an increase in basic pay rates. The weekly standard working time will be 39 hours for all federal employees - meaning an extension of 30 minutes in western Germany and a reduction of an hour in eastern Germany. Working time for public employees at local level remained unchanged but was left open to future negotiations.

Total number of collective agreements

At the end of 2005, 64,341 valid collective agreements were officially registered at the Federal Ministry of Labour and Social Affairs (Bundesministerium für Arbeit und Soziales, BMAS) - the 2004 figure was 61,772. Of these, 35,031 were 'association agreements' (Verbandstarifverträge), ie collective agreements concluded between trade unions and employers' associations, and 29,310 were company agreements (Firmentarifverträge), ie collective agreements concluded between trade unions and individual employers.

Gender pay gap

Although a considerable gap in average earnings between men and women continues to exist in Germany (DE0404205F), special provisions to tackle wage discrimination and to promote equal opportunities were not included in the collective agreements concluded in 2005.

Commentary

As in previous years. employers and trade unions continued to be engaged in a debate on the decentralisation of collective bargaining (DE0511101N) in 2005. A survey conducted by the WSI amongst works councils confirmed continuing scepticism amongst works councils about any further decentralisation.

Although trade unions managed to maintain working time standards in general, they had to accept provisions that allow under certain conditions substantial deviations from the agreed working time. In accordance with extended provisions on working time flexibility, the standard agreed working time therefore remained in many industries more a point of reference than an indicator of the weekly hours actually worked. The average increase in collectively agreed pay of 1.6% (calculated on an annual basis) remained below the 'cost-neutral margin of distribution' composed by the sum of the year’s increase in consumer prices and labour productivity.

The fact, that actual gross wages and salaries rose only by 0.5% in 2005 shows that Germany was faced just as in previous years by a notable negative wage drift, whereby actual pay increases are significantly below collectively agreed pay increases. This negative wage drift is explained by various factors. Amongst others: not all employees are covered by collective bargaining; not all sectors saw pay increases in 2005; and 'on-top' pay increases were reduced or did not follow the agreed pay rise. Finally, the great number of so-called 'mini-jobs', ie jobs not paid more than EUR 400 a month, reduces the average per capita income. (Heiner Dribbusch, Institute for Economic and Social Research, WSI)

Eurofound recommends citing this publication in the following way.

Eurofound (2006), 2005 collective bargaining round examined, article.