Chemicals agreement aims to motivate older workers

A collective agreement tackling the challenges of an ageing workforce was signed by north-east German employer representatives and the Mining, Chemicals and Energy Industrial Union in November 2011. The agreement affects around 30,000 employees and improves working conditions for specific groups of workers. A survey by the German Federation of Chemicals Employers’ Associations shows such measures may play a major role in chemical companies in other regions, too.

Background

An ageing workforce and shortage of skilled labour in the chemical industry are of great concern to social partners within the sector. A company survey by the German Federation of Chemicals Employers’ Associations (BAVC) highlights measures already being used to retain skilled workers. The social partners in north east Germany have even concluded a new collective agreement which deals specifically with demographic change.

Company survey results

Details from a BAVC company survey (in German, 447Kb PDF) of more than 600 chemical companies with some 340,000 employees were released in November 2011. The survey looked at the ‘demography fund’, set up in 2008 as part of the Collective Agreement on Working Life and Demography. Since 2010, employers have paid an annual €300 per employee into the fund (DE0805029I).

At that time the industry’s social partners were already looking for incentives to keep ageing employees at work. Their managements and works councils were able to negotiate an agreement making it possible for companies to introduce any of the following measures, or a combination of them:

  • long-term working time accounts;
  • partial retirement schemes;
  • progressive retirement;
  • invalidity and old-age pension plans based on the corresponding collective agreement.

The recently released BAVC figures show that 76% of the companies surveyed invested their funds into pension plans based on the corresponding collective agreement (affecting 52% of employees). Another 25% of companies opted for long-term working time accounts (affecting 57% of employees). A further 8% went for invalidity pension plans (affecting 5% of employees). Finally, 7% invested in partial retirement schemes (affecting 8% of employees).

The survey showed that smaller companies opted for pension plans based on the corresponding collective agreement, while medium-sized and large companies favoured long-term working time accounts.

Apart from these human resource measures offered by the 2008 collective agreement, the employer organisation for the chemical industry in north east Germany (AGV Nordostchemie) and the Mining, Chemicals and Energy Industrial Union (IG BCE) have also pushed ahead at the regional level. Their latest collective agreement was affected by the demographic changes in eastern Germany.

New chemical industry collective agreement

At the beginning of November 2011, the employer organisation AGV Nordostchemie and the union IG BCE announced in a press release (in German, 485Kb PDF) that they had reached a compromise during the sixth round of collective bargaining negotiations which had been underway since November 2010.

The newly concluded agreement, which affects around 30,000 employees, consists of several elements:

  • employees will receive higher wages from 1 July 2012;
  • the union and employer organisation agreed an average increase of 1.25% on monthly pay;
  • the differences in Christmas bonus payments for employees in eastern and western Germany will be eliminated in two steps by 2015;
  • these bonuses will rise from 65% to the collectively agreed 95% of employees’ monthly gross wages in northeastern Germany.

The General Manager of AGV Nordostchemie, Paul Kriegelsteiner, told the Financial Times Germany on 4 November 2011 that 70% of chemical company employees are between 44 and 59 years old, putting them in the older or retirement age category.

The social partners agreed that from 2013, regional chemical companies would invest 2.5% of the collectively agreed annual wage bill in a fund to combat age-related staffing problems and the imminent shortage of skilled labour.

The fund will be used to put in place human resource measures for the needs of employees at different stages of their working lives. Chemical companies will, for example, be able to use the fund to implement various age-based working conditions, to allow employees to take leave to care for children or elderly relatives, or simply for recreational purposes. Each company will decide which of these measures to take up.

The new collective agreement offers incentives for younger employees to work in eastern Germany and for older staff to stay in their jobs. In a press statement, Georg Rheinbay, Chief Negotiator for the employers, said the new collective agreement paves the way for measures that will temporarily relieve employees of the burdens specific to certain phases of their working lives.

The social partners agreed to continue their talks on the sector’s wage structure and the further development of the fund in 2014.

Social partners’ views

AGV Nordostchemie identified the challenges facing the chemical industry a year ago. Since then, employers have emphasised the need to take action to counter demographic change and make workplaces in regional chemical firms more attractive. However, Mr Rheinbay also stressed that the economic success of a company must remain the primary consideration. On 2 November 2011, when he announced the conclusion of the latest agreement, he said the new agreement made it possible for chemical industry employees to temporarily reduce their working hours in personally difficult times. The new fund will ensure that they will not lose much of their wage during such periods, and this might encourage them to remain with their employers rather than resign or retire.

On 2 November 2011, the IG BCE also published their views on the new agreement. Their Chief Negotiator, Peter Hausmann, welcomed it, saying its age-based working time model could influence other branches of industry. For the first time, clauses on working time in a collective agreement were oriented towards employees’ differing needs at differing stages of their lives, he said. This would help reduce the burden on shift workers, parents and employees with sick or disabled relatives. Petra Reinbold-Knape, Chair of IG BCE’s north-eastern German branch, stressed that the new agreement was important if employees were to work until retirement age in good health.

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

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