Germany: Latest working life developments – Q3 2017

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Economic stability, the conclusion of several sectoral agreements, the Federal Constitutional Court ruling on the Collective Bargaining Unity Act, and results of the federal elections are the main topics of interest in this article. This country update reports on the latest developments in working life in Germany in the third quarter of 2017.

Economic stability

Germany’s economic situation continued to be steady throughout the second quarter of 2017, with the price-adjusted German GDP rising by 0.6%, which is only marginally slower than in the first quarter (0.7%). Unemployment rates stayed at a low 5.5% in September, with the Federal Employment Agency (BA) having 773,000 registered job vacancies – 86,000 more than the previous year. However, the shortage of skilled workers poses a major issue since vacancies might jeopardise business operations and discourage investments.

Collective bargaining act deemed constitutional

In July 2017, the Federal Constitutional Court confirmed the Collective Bargaining Unity Act (Tarifeinheitsgesetz) which was implemented in 2015. The act states that if there are competing collective agreements in one establishment, only the agreement of the trade union with the most members in the company is applicable. Several unions, such as the United Services Union (ver.di), the German Civil Service Union (dbb) and the German Airline Pilots’ Association (VC), argued that this jeopardised freedom of association and the right to strike, which are guaranteed by German law.

The Federal Constitutional Court declared the act largely constitutional, but emphasised that the law should provide protective measurements regarding certain occupational groups and minority unions until the end of 2018. In addition, the court also stressed that the right of minority unions to strike had to be ensured.

Sectoral agreements reached and future negotiations

After conflict over a collective bargaining agreement in the retail, mail order and e-commerce sector, agreements were finally reached in Hamburg and Baden-Württemberg. The new collective bargaining agreements offered employees a wage increase of 2.3% starting in June 2017 and a further wage increase of 2% from April 2018. The agreements serve as benchmarks for other regions. There is also continuing unrest, including strikes, over the search for a collective agreement with US company Amazon, with ver.di accusing Amazon of denying employees the right to collective bargaining. The union is calling on the government to extend the sectoral collective agreement.

An agreement was reached between the German Insurance Employers’ Association (AGV), ver.di, the Associated Union of Workers in German Trade and Industry (DHV) and the German Farmers’ Federation (DBV) after a fourth round of talks. The agreement, concluded at the end of August, stipulates a wage increase of 2.0% by November 2017 and an increase of 1.7% by December 2018. The agreement will last 29 months, which will give businesses greater planning reliability and employees real wage growth.

Core topics in the upcoming collective bargaining round in the metal and electric sector will be working time, working time flexibility and wage increases. The German Metalworkers’ Union (IG Metall) proposes a wage increase of around 6% and the option to reduce weekly working time from 35 hours to 28 hours for a maximum of two years. However, Rainer Dulger, President of the Federation of German Employer Associations in the Metal and Electrical Industry (Gesamtmetall), said the union’s proposals could not be borne by German businesses – especially considering the lack of skilled workers in Germany. Instead of reducing working hours, schemes that are more flexible were needed.

Federal election results

Federal elections were held on 24 September 2017, with the Christian Democrats (CDU), its Bavarian sister party the Christian Social Union (CSU) as well as the Social Democrats (SPD), suffering their greatest losses since 1949. The far-right Alternative for Germany (AfD) gained 12.6% of the vote – its representatives, as well as those for the Liberals (FDP) (10.7%), the Left (Die Linke) (9.2%) and the Greens (8.9%) will take their seats in the Bundestag, the lower house of the German parliament.

The new government will most likely be led by the CDU/CSU, supported by the FDP and the Greens (called the Jamaica coalition because their colours represent those of the Jamaican flag). It is expected that the new government will be business-friendly but trade unions fear the lack of an advocate on topics such as pensions and general binding collective bargaining agreements. The electoral success of the far-right AfD shocked the trade unions as well as German economic representatives. Dr Eric Schweitzer, President of the German Chambers of Industry and Commerce (DIHK), stated that a stable government in challenging times was needed.

Commentary

Collective bargaining in the metal and electric industry will start in December 2017, affecting around 3.9 million workers in Germany. The call by IG Metall for a 6% wage increase and an option to reduce weekly working hours has already met with strong resistance from employers, and negotiations are expected to be tough. The process of building a new government, with a possible Jamaica coalition, will be challenging and take time.

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