Interim report on 2012 bargaining round

In July 2012, the Institute of Economic and Social Research presented its interim report on Germany’s 2012 collective bargaining round. The study evaluates the collective agreements concluded in the first half of 2012, which affected about 38% of all employees covered by such agreements. Calculated on an annual basis, the average increase in collectively agreed wages and salaries will be around 2.7% in 2012, which is above the average pay increase of 2% in 2011.

Background

In July 2012, the Collective Agreement Archive (Tarifarchiv) of the Institute for Economic and Social Research (WSI) within the Hans Böckler Foundation (Hans Böckler Stiftung) published its interim report (in German, 1.34Mb PDF) on the 2012 collective bargaining round.

The study evaluates all collective agreements concluded by trade unions affiliated to the Confederation of German Trade Unions (DGB) in the first half of 2012. These new collective agreements cover 7.1 million employees (of whom 0.9 million work in eastern Germany), which accounts for about 38% of all employees covered by collective agreements. In 2012 a further 8.2 million employees will receive pay increases agreed in previous years.

Calculated on an annual basis, the average pay increase in wages based on collective agreements for 2012 will be around 2.7%, which is above the average increase of 2% in 2011 (DE1107019I). The average increase in pay levels in eastern German is estimated to be about 2.8%, bringing this year’s increases slightly above the level in western German (Table 1).

Average wage increases in 2012 range between 1.9% in the consumption goods sector and 3.3% in the investment goods sector with the commerce sector matching the average of 2.7%.

As of 30 June 2012, collectively agreed pay in eastern Germany amounted to around 96.3% of average western German pay levels in 2012, which is slightly below the 96.6% reached at the end of 2011.

The average duration of the pay agreements concluded in the first half of 2012 is 17 months, which is well below the 23 months’ duration of the agreements concluded in 2011. Table 1 gives an overview of average pay increases in wages based on collective agreements in various economic sectors calculated on an annual basis for 2012.

Table 1: Increases in collectively agreed pay (%)

Sector

Western Germany

Eastern Germany

Germany as a whole

Horticulture, agriculture, forestry

2.8

3.3

2.9

Energy, water, mining

1.7

3.4

2.0

Raw materials and production industries

3.0

3.1

3.0

Investment goods

3.3

3.4

3.3

Consumption goods

1.8

2.4

1.9

Food

2.9

3.4

3.0

Construction

2.4

2.7

2.4

Commerce

2.7

2.7

2.7

Transport and communication

2.3

2.7

2.4

Banking, insurance

2.0

2.0

2.0

Private services, non-profit associations

2.4

3.1

2.5

Public services, social security

2.2

2.1

2.2

All sectors

2.7

2.8

2.7

Note: Annual pay increases 2012 compared with 2011. Figures are calculated on the basis of all pay increases coming into effect in 2012, collectively agreed either in the first half of 2012 or in previous years.

Source: WSI Collective Agreement Archive 2012 (as at 30 June 2012).

Major settlements

On 31 March 2012, the United Services Union (ver.di) agreed a package of collective agreements with representatives of the federal government (Bundesregierung) and the Municipal Employers’ Association (VKA) (DE1205029I). The agreements cover about 1.3 million public sector employees in local transport, utilities and hospitals. The settlement was reached after only three rounds of negotiations but followed two large waves of warning strikes involving hundreds of thousands of public sector employees.

The pay agreement consists of three successive pay increases. Wages and salaries will rise by 3.5% backdated to 1 March 2012. A second increase of 1.4% will run from 1 January 2013 and a further increase of 1.4% from 1 August 2013. Wages for apprentices and trainees will increase by €50 per month from 1 March 2012 and by a further €40 per month by August 2013. The parties also agreed that all apprentices will be offered an employment contract of at least 12 months when their training was complete.

On 19 May 2012, the German Metalworkers’ Union (IG Metall) and the Baden-Württemberg Employer Association for the Metal and Electrical Industry (Südwestmetall) settled on a package of agreements which served as a pilot agreement for other regional settlements (DE1206019I). Altogether the collective agreements concluded in this year’s bargaining round in the metalworking sector cover some 3.3 million employees.

In addition to a pay increase of 4.3% for 13 months, the bargaining parties agreed on various provisions concerning apprentices and temporary agency workers. Employers are now required to provide apprentices with a permanent employment contract on completion of training. Exceptions are only allowed under defined circumstances but particularly when the company offers more training places than its planned staff requirement.

The parties agreed that the works council should be consulted before any temporary workers were employed, although the final decision remains with the employer. In addition, IG Metall concluded a separate collective agreement with a bargaining alliance of the two major employers’ associations in the temporary agency sector to at least partly bridge the gap between collectively agreed wages for temporary workers and those agreed in the metalworking sector. To minimise this gap, temporary agency workers who are hired out to the metalworking sector for longer periods will receive supplements on top of their standard pay.

On 24 May 2012, the Mining, Chemicals and Energy Industrial Union (IG BCE) and the German Federation of Chemicals Employers’ Associations (BAVC) reached a compromise on a new package of collective agreements affecting approximately 523,000 employees. Following a so-called ‘zero-month’ with no increase, there will be a wage increase of 4.5% for all employees in the chemicals sector. The pay agreements cover a period of 19 months. The remuneration of apprentices will be increased by €50 a month.

BAVC and IG BCE agreed that the wage increase can be:

  • postponed for economic reasons by the bargaining parties at establishment level by a maximum of two months;
  • brought forward and higher wages paid from the very first month of the new agreement.

As in the metalworking sector, IG BCE agreed with the employers’ associations of the temporary agency sector on supplements for temporary workers hired out to the chemicals sector.

Table 2 presents a summary of selected pay agreements concluded up to June 2012.

Table 2: Summary of selected pay agreements

Date

Bargaining area

Outcome

Duration

12 January 2012

Deutsche Post (German Mail)

One-off payment of €500 for three months4.0% on 1 April 2012

15 months

31 March 2012

Public sector (federal and local level)

3.5% on 1 March 20121.4% increase step on 1 January 2013 and 1.4% on 1 August 2013

24 months

28 April 2012

Deutsche Telekom

Three ‘zero months’2.3% on 1 May 2012, 2.1% on 1 January 2013, 2.1% on 1 August 2013

24 months

4 May 2012

Hotels and restaurants

One ‘zero month’3.1% on 1 June 2012, 1.6% on 1 February 2013, 1.6% on 1 September 2013

24 months

8 May 2012

Private transport (Baden-Württemberg)

3.5% on 1 April 2012, 2.5% on 1 April 2013;

24 months

19–22 May 2012

Metal and electrical sector

One ‘zero month’4.3% on 1 May 2012

13 months

24 May 2012

Chemicals sector

One ‘zero month’4.5% for 18 months

19 months*

31 May 2012

Volkswagen

4.3% on 1 June 2012

13 months

       

6 June 2012

Banking sector

One-off payment of €350 for four months2.9% on 1 July 2012, 2.5% on 1 July 2013

26 months

Note: * End date differs regionally: 31 December 2013, 31 January 2014 28 February 2014

Source: WSI Collective Agreement Archive, July 2012

Gender pay gap

Despite the considerable pay gap between men and women in Germany (DE0806019I), special provisions to tackle wage discrimination and to promote equal opportunities were not included in those collective agreements concluded in the first half of 2012.

Commentary

The average increase of collectively agreed pay will be 2.7% in 2012. As the increase of consumer prices in 2012 is expected to be 2%, there will be on average a noticeable real wage increase in 2012.

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

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