New trade associations in motor repair sector pose threat to collective bargaining

In March 2008, in the run-up to the 2008 collective bargaining round in the motor vehicle repair sector, the daily business newspaper ‘Handelsblatt’ reported on structural changes in the sector. In 2007, many regional trade associations annulled existing collective agreements, with some ceding collective bargaining authority to new employer organisations. The German Metalworkers’ Union fears that these changes will erode the association-level agreement in the sector.

The German Association for Motor Trades and Repair (Zentralverband deutsches Kraftfahrzeuggewerbe, ZDK) estimates that 473,500 workers, including apprentices, were employed in the sector in 2006. Regional trade associations – also known as guilds (Landesinnungen) – have traditionally operated as employer organisations and some continue to do so, conducting collective bargaining negotiations with the German Metalworkers’ Union (Industriegewerkschaft Metall, IG Metall) or the United Services Union (Vereinte Dienstleistungsgewerkschaft, ver.di) at regional level. The 2008 collective bargaining round in the motor vehicle repair sector (Deutsches Kraftfahrzeuggewerbe, Kfz-Gewerbe) does not only cover pay issues, but also the issue of a more fundamental change in the employers’ collective bargaining strategy.

Background

Membership organisation

It should be noted that the organisation of members in regional trade associations deviates greatly from the arrangements for membership of employer organisations in other industry sectors. The Employers’ Association for the Metal and Electrical Industry (Arbeitgeberverband der Metall- und Elektroindustrie, Gesamtmetall), for example, offers the following two types of membership (DE0503101N):

  • membership with a binding commitment to collective agreements (mit Tarifbindung). Employer organisations represent the employers in collective bargaining, as well as offering other services such as consultancy services on labour law issues or social policy, and developing guidelines and recommendations for the application of new technologies;
  • special membership without a binding commitment to collective agreements (ohne Tarifbindung).This option does not entail the representation of the employers in collective bargaining and employers are not bound by collective agreements concluded by the employer organisation to which they are affiliated. This membership type nonetheless includes an entitlement to all other services and benefits offered by the employer organisation.

Membership regulation

The organisation of the motor vehicle repair sector, however, is based on the regulations laid down in the Crafts and Trade Code (Handwerksordnung (145Kb PDF)). This document does not allow for an employer’s membership of a regional trade association without a binding commitment to collective agreements concluded by the association. Members of such trade associations have therefore automatically been covered by collective agreements, regardless of the unionisation level in their workforce. If employers in the motor vehicle repair sector wished to be excluded from collective agreements, they could only opt out by resigning their regional trade association membership.

New organisational structures

Faced with declining membership, regional trade associations decided to look for new organisational structures. In 2007, several of such regional trade associations in the motor vehicle repair sector, such as in Baden-Württemberg in southwest Germany and in Bavaria in southern Germany, annulled existing collective agreements and formally renounced their collective bargaining competence. In doing so, they paved the way for the establishment of new employer organisations (Tarifgemeinschaften) to take over the collective bargaining negotiations. In these regions, employers in the motor vehicle repair sector can henceforth join a regional trade association without being bound by collective agreements.

In fact, regional trade associations in western Germany followed the example set by their eastern German counterparts. The latter had already ceded their collective bargaining competence and established a new employer organisation (in German) at the beginning of 2005.

Position of social partners

On 28 February 2008, the IG Metall Secretary for the Baden-Württemberg region, Sabine Zach, pointed out in a press statement (in German) that employers would have provoked an escalation of unforeseen dimensions by annulling collective agreements in the autumn of 2007. Furthermore, Ms Zach emphasised in an IG Metall newsletter (in German, 758Kb PDF) that the employers were seeking to ‘trigger a downward spiral’ by annulling collective agreements. Ms Zach added that deregulation would not solve the economic problems of the industry. IG Metall would therefore be fighting for the maintenance of collective agreements, even if the union had to enforce its claims one by one at individual establishments in the sector.

On 3 March 2008, collective bargaining expert Ulrich Dilchert of ZDK declared in an article published by the Munich-based newspaper Süddeutsche Zeitung that craft and trade-based enterprises in the motor vehicle repair sector could from now on be a member of a regional trade association without being covered by a collective agreement. Enterprises or craft-based establishments wanting to participate in collective bargaining would still have the option of joining one of the newly-founded employer organisations. Mr Dilchert further highlighted that these recent developments would not have been intended to erode the association-level agreement (Flächentarifvertrag). On the contrary, retaining the agreement was important to prevent employers from engaging in competition on the basis of working conditions.

Sandra Vogel, Cologne Institute for Economic Research (IW Köln)

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