New pay agreement signed in metalworking industry

In November 2008, collective bargaining parties in Baden-Württemberg’s metalworking industry signed a new pay agreement. The settlement, adopted as a ‘pilot agreement’ in the other bargaining regions, provides for a one-off payment of €510, a general pay increase of 2.1% on 1 February 2009 and a second increase of 2.1% on 1 May. The second pay increase can be delayed by way of voluntary works agreement for up to seven months. A further one-off payment of €122 is due in September.

Background

Given the excellent business results of the major companies in the metalworking industry in 2008, the German Metalworkers’ Union (Industriegewerkschaft Metall, IG Metall) had originally tabled a pay demand of 8% and aimed at general pay increases above those agreed in 2007 (DE0706019I). However, whereas early in 2008 the union had been successful in this respect in the steel industry (DE0803029I), the economic environment had become much more difficult for IG Metall by September and October 2008. Following the turmoil in the financial markets, many car manufacturers announced cuts in production as did other companies. Considering these circumstances, and after a large mobilisation of workers in warning strikes, IG Metall finally decided to seek an agreement without major industrial action, although this decision caused some debate among trade union activists. The outcome was finally accepted against 12 dissenting votes by the 220 delegates of the union’s bargaining commission in Baden-Württemberg in southwest Germany.

New pay agreement reached

On 12 November 2008, IG Metall and the employer association for the metal and electrical industry in Baden-Württemberg (Verband der Metall- und Elektro-Industrie Baden-Württemberg, Südwestmetall) reached a new collective agreement on pay increases covering some 850,000 employees.

The agreement followed a series of warning strikes involving some 600,000 workers in about 2,700 establishments across the whole metalworking industry in Germany. The largest strike activities occurred in Baden-Württemberg, where some 170,000 workers in more than 500 companies took part in the strike action followed by Bavaria in the south and North Rhine-Westphalia in the west of the country with some 130,000 workers involved.

The settlement was adopted as a ‘pilot agreement’ and applied in other bargaining regions, with some adjustments.

Pay increases

The new collective agreement on pay will last for 18 months, covering the period from November 2008 to 30 April 2010, and provides for the following:

  • a lump-sum payment of €510 to compensate for the three so-called ‘zero months’ with no pay increase from November 2008 to January 2009; apprentices will receive a one-off payment of €133;
  • a general pay increase amounting to 2.1% from 1 February 2009;
  • a general pay increase amounting to 2.1% from 1 May 2009;
  • a lump-sum payment of €122 in September 2009; apprentices will receive a one-off payment of €32;
  • a lump-sum payment worth 0.4% of the monthly income covering each month from May 2009 to December 2009. These sums will not be paid out to employees but will be used to compensate for additional costs involved in the collective agreement on partial retirement due to come into force on 1 January 2010 (DE0810039I).

Depending on the economic situation of the companies, works councils and employers may agree at company level by way of a voluntary works agreement that the general increase due in May 2009 may be delayed by up to seven months. In the case of an agreed delay, the second lump-sum payment earmarked for September 2009 will be cut in proportion to the number of months of delay.

Reactions of social partners

In a statement to the press (in German) on 20 November 2008, the Chair of IG Metall in Baden-Württemberg, Jörg Hofmann, stated that he was not fully happy with the outcome but considered the agreement as an acceptable comprise given the current economic circumstances. He believed that the agreement had only been possible as a result of the commitment of employees which had been expressed in the warning strikes involving some 170,000 employees in Baden-Württemberg alone.

On the employer side, the Chair of Südwestmetall, Jan Stefan Roell, welcomed the agreement in a press release (in German) on 12 November 2008. He considered the outcome to be below the levels agreed in 2007. However, he believed the agreement to be a fair compromise which balanced flexibility and stability in a time of economic crisis and added that he was happy that a strike dispute had been avoided.

Heiner Dribbusch, Institute of Economic and Social Research (WSI)

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