1996 solidarity pact in the chemical industry proves successful

In April 1997, the social partners in the German chemical industry reviewed the implementation of their 1996 "solidarity pact", and their assessment is favourable. Employers have stuck to their commitment to maintain employment levels, while agreement's provisions on part-time work for older workers are becoming more significant. This feature summarises the review, and outlines recent bargaining events in the chemical industry.

The German chemical industry enjoys a long tradition of successful consensus-based industrial relations. In spring 1996, the bargaining partners concluded a "solidarity pact" in the form of a package of regional and national collective agreements. The agreements ran for 12 months and covered 590,000 employees in western Germany. The aim of the deal was to meet the challenges of globalisation and structural change, as well as to extend the competences of the social partners at enterprise and company level. The implementation of the two most important elements of the solidarity pact - the employment alliance and the collective agreement on part-time work for older workers - has recently been reviewed.

The review of the 1996 employment alliance

On 29 March 1996, the regional bargaining partners in Rhineland Palatinate signed an "employment alliance" in the form of a collective agreement which included several measures to save and increase employment:

  • until the end of February 1997, the number of employees should not fall below the number of employees on 1 July 1996 (excluding vocational trainees and temporary workers);
  • the number of vocational trainees in 1996 should not fall below the number in 1995;
  • a general 2% pay increase;
  • a flat-rate pay increase of DEM 25 per month for vocational trainees;
  • the continuation of the provision in the previous contract allowing "entrance wages" of 90% of the regular wage to be paid where long-term unemployed people are recruited;
  • a joint declaration by the social partners, addressed to the enterprise level, demanding the use of flexible working time, the support of part-time work and the taking-on of vocational trainees; and
  • the continuation of round-table talks on labour market issues.

The IG Chemie Papier Keramik (IG CPK) trade union and the Federation of Employers' Associations of the Chemical Industry (Bundesarbeitgeberverband Chemie, BAVC) agreed on extending this pilot agreement to all other collective bargaining districts in the west German chemical industry.

According to a survey by the BAVC, the number of new vocational trainees in the industry increased from 6,594 in 1995 to 7,141 in September 1996. Another recent BAVC survey, covering 1,700 enterprises, reveals that there were 530,654 employees (excluding vocational trainees and temporary workers) in February 1997. On 1 July 1996, the figure had been 523,603. The reasons for this increase are that 2,063 vocational trainees were taken on and that 4,500 temporary workers were given open-ended employment contracts.

IG CPK assesses the results of the BAVC surveys as a positive signal and as proof of the problem-solving capacity of industry-wide collective agreements. According to Horst Terbrack, the union's executive chair, this was the first time that an employers' association had offered to stop workforce reductions in a whole industry through an industry-wide collective agreement. The managing director of the BAVC, Hans Frey, also sums up the results of the solidarity pact as positive.

Review of the agreement on part-time work for older workers

Another element of the 1996 solidarity pact, the national-level agreement between the BAVC and IG CPK on part-time work for older workers (Altersteilzeit), is becoming more and more significant. In 1996, after consultations between the social partners and the federal government, the German parliament passed the law for the promotion of phased transition to retirement (Gesetz zur Förderung eines gleitenden Übergangs in den Ruhestand), which promotes part-time employment for employees in the years preceding retirement. In brief, an employee qualifies for the scheme if: the employer and employee agree on a 50% reduction of working time; the employee pays the employee an older worker's part-time wage (Altersteilzeitgehalt) of 70% of the net income the employee would receive if working full time; and contributions to the pension scheme are paid on the basis of 90% of the gross full-time income. The Federal Employment Service (Bundesanstalt für Arbeit) undertakes to pay the additional expenditure borne by the employer for up to five years, if the resulting vacancies are refilled or a corresponding number of vocational trainees is taken on.

In February 1996, the social partners in the chemical industry signed a collective agreement on the basis of the new law. The agreement, valid until 2001, increases the older worker's part-time wage to a minimum of 85% of previous net income. Furthermore, the employees can choose between two options: either five years of part-time work; or working full-time during the first half of the five years and then being released from work in the second half. The intention is to refill the vacant positions and to achieve positive labour market effects. The chemical industry was the first German industry to conclude a collective agreement on the basis of the new law.

A recent survey by the IG CPK shows that by the end of February 1997 more than 3,600 employees in 400 out of 1,700 enterprises had made use of the older workers part-time scheme, most of which preferred the second option. Another 2,800 employees have applied for the scheme. All vacancies will be refilled, so the Federal Employment Service's condition for financial support is met.

The current agreement

On 19 December 1996, the BAVC and the IG CPK agreed on a package of collective agreements, which would come into effect on 1 March 1997 and have a duration of 12 months:

  • a wage increase of 1.5% plus an additional lump-sum payment of DEM 60;
  • a flat-rate pay increase of DEM 25 per month for vocational trainees;
  • continuation of the regulations on entrance wages;
  • an umbrella agreement providing for 100% sick pay in exchange for a reduction of the extra month's salary bonus payment to 95%; and
  • through voluntary works agreement, employers and works councils can reduce the extra month's salary by a further 1.5% to fund extra payments for workers who do not go sick.

Furthermore, both parties agreed on the renewal of the existing general umbrella agreement until 31 December 1998, and the continuation of the joint dispute resolution agreement until 31 December 1999.

Commentary

The industrial relations system in the German chemical industry has an excellent reputation for reaching innovative and flexible agreements. Furthermore, it is famous for its reliability and stability. The successful implementation of the 1996 solidarity pact is evidence to this effect. However, there are some storm clouds on the horizon. First, the employers' side has increasingly been confronted with the problem of organising different branches of the industry within the highly centralized collective bargaining system. The future of the employers' united front will primarily depend on innovative arrangements which can mediate the conflicts between the highly profitable, export-oriented branches of the large multinationals and the less profitable branches of the small and medium-sized enterprises. Second, members of the IG CPK trade union recently criticised the relatively moderate wage increases in the chemical industries, in the face of the rising profits of the large multinational enterprises. Nevertheless, most observers are confident that the social partners in the chemical industry will master these problems and maintain the relatively centralised and successful collective bargaining system. (Stefan Zagelmeyer, IW)

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