1999 Annual Review for GERMANY

This record reviews 1999's main developments in industrial relations in GERMANY

Economic developments

In 1999, the German economy experienced a slight downturn. According to calculations from the Federal Statistical Office (Statistisches Bundesamt), GDP rose by 1.4% in real terms in 1999, which was a smaller increase than the previous year (2.2%) and one of the lowest in the European Union. Growth was fitful throughout the 1990s, falling from a peak of 2.3% in 1994 to 0.8% in 1996 and then rising again until 1998.

Consumer prices rose by 0.6% in 1999 (according to Federal Statistical Office figures), which was the lowest inflation rate of the 1990s and the culmination of a relatively steady fall since 1992 (when the rate stood at 5.0%). The 1999 budget deficit (according to OECD figures) is expected to be the lowest since German unification, at 1.5% of GDP (Maastricht definition), compared with 1.7% in 1998 and 2.6% in 1997. The deficit remains far below the reference value of 3% defined in the EU Stability Pact. The public debt (according to OECD figures) was around 61% of GDP in 1999 (Maastricht definition), compared with 60.7% in 1998 - the debt has been over the 60% Maastricht reference level since 1997.

According to the Federal Employment Service, nearly 4.1 million people were, on average, officially registered as unemployed in 1999. Compared with 1998, this represented a slight reduction of around 180,000. The highest level of unemployment had been reached in 1997, at nearly 4.4 million, following a steep rise over the 1990s. The official rate of unemployment (defined as % of the civilian labour force) was 11.7% in 1999, down from 12.3% in 1998 and 12.7% in 1997. Unemployment continued to be significantly higher in east Germany - 19% (1,344,000) in 1999, compared with 19.5% (1,375,000) in 1998 - than in the west - 9.9% (2,756,000) in 1999, compared with 10.5% (2,904,000) in 1998.

Using the standard definition of the International Labour Organisation (ILO), the average number of unemployed people was nearly 3.6 million in 1999, which was equivalent to a rate of employment (defined as % of all persons engaged in economic activity) of 9.0%. This compared with 3.7 million (9.4%) in 1998 and 3.9 million (9.8%) in 1997.

Political developments

Since the last general election in September 1998, the German federal government has been composed of a "red-green" coalition comprising the Social Democratic Party (Sozialdemokratische Partei Deutschlands, SPD) and the Alliance 90/The Greens (Bündnis 90/Die Grünen). In 1999, the red-green coalition parties were confronted with considerable political difficulties. Almost all important regional elections were won by the major federal opposition party, the conservative Christian Democratic Party (Christlich Demokratische Union, CDU). Furthermore, together with its Bavarian associate party, the Christian Social Union (Christlich Soziale Union, CSU), the CDU won nearly 49% of the votes in the European Parliament elections, compared with 31% for the SPD and 6% for the Greens. The CDU won the largest share of the vote in most of the federal state elections, and took over from the SPD as the governing party in Hesse and in Saarland. In two of the east German federal states (Saxony and Thuringia), the SPD even dropped back to third place, behind the CDU and the Party of Democratic Socialism (Partei des Demokratischen Sozialismus, PDS). As a result, the red-green coalition lost its majority in the Bundesrat, Germany's second legislative body, composed of the governments of the federal states. In the local elections in North Rhine-Westphalia, which was always considered to be the political "heartland" of the Social Democrats, the SPD had its worst results since the end of the second world war, while the CDU gained more than 50% of the votes.

These election failures marked a significant political crisis for the federal government, which seemed to be losing public support for its major political projects. The latter was particularly true in the case of the government's budgetary consolidation plan, which was widely accused of being "anti-social", since it has placed a larger burden on groups with lower incomes, in particular pensioners and unemployed people. Generally speaking, there was much disappointment that, after 16 years of a conservative government, the new red-green coalition did not fulfil the expectations of a real change in politics. At the end of 1999, however, far-reaching financial scandals within the CDU once more induced a change in the political affiliations of the German public. At the beginning of 2000, all opinion polls indicated that the red-green government seemed to be regaining its political support.

Alliance for Jobs – new tripartite concertation

One of the major political projects of the new red-green government was the creation of a new tripartite arrangement which brings together representatives of the federal government, trade unions and employers' and business associations. In December 1998, the "Alliance for Jobs, Training and Competitiveness" (Bündnis für Arbeit, Ausbildung und Wettbewerbsfähigkeit) was established as a new permanent tripartite arrangement at national level, including regular top-level talks between the leading representatives of all three parties as well as various joint working groups on specific topics (DE9812286N) (for further details, see below under "Job security").

As a contribution to the third top-level meeting of the Alliance in July 1999, the German Federation of Trade Unions (Deutscher Gewerkschaftsbund, DGB) and the Confederation of German Employers' Associations (Bundesvereinigung der deutschen Arbeitgeberverbände, BDA) presented a joint declaration which included various proposals for an "employment-oriented" collective bargaining policy (DE9907219F). However, the controversial debates between the collective bargaining parties which followed this declaration suggested to some commentators that many of the positions in the BDA/DGB declaration represent more of a rhetorical compromise than anything else, as both parties still have rather different perceptions of bargaining policy.

In the last months of 1999, the debates within the Alliance were dominated by the proposals for a collectively-agreed early retirement scheme (made by the IG Metall metalworkers' union) on the one hand (DE9910217F) and the employers' demands for a long-term oriented policy of wage restraint on the other. At the fifth top-level meeting of the Alliance in January 2000, the parties involved finally agreed on another joint statement on "job-creation wage policies", which contains demands both for long-term employment-oriented wage agreements and job-creating early retirement schemes (DE0001232F). The 2000 collective bargaining round, however, will be a test of whether both parties can agree on a concrete model based on an exchange of wage restraint for working time reduction.

Collective bargaining

Pay

The 1999 collective bargaining round almost exclusively concerned wages and salaries, since the unions concentrated their demands very much on pay claims. After some years of only very moderate wage increases, which sometimes have even involved decreases in real wages, several unions called for an "end to moderation" and entered the 1999 bargaining round with pay claims of between 5.5% and 6.5% (DE9810279F). Employers' associations, however, consistently rejected such demands and, instead, argued for the continuation of a policy of wage moderation.

One of the first new collective agreements was signed in the metalworking industry, which became the clear trend-setter for the 1999 bargaining round. After more than 1 million employees had participated in warning strikes, the bargaining parties in metalworking concluded a new agreement in February 1999 which provided for a 3.2% pay increase, plus a one-off, unconsolidated payment of 1% of annual income (DE9903295F). In the following months, almost all other sectors more or less followed the target set by the metalworking agreement and concluded pay increases mostly between 2.9% and 3.3% (see table 1).

Source: WSI Collective Agreement Archive 1999.

Overall, in 1999 trade unions affiliated to DGB concluded new collective pay agreements for some 18.8 million employees. According to the WSI Collective Agreement Archive, the average collectively-agreed pay increase was 3.0%. The difference between agreed pay increases in west (2.9%) and east Germany (3.4%) was again diminished and the speed of the adjustment between west and east German pay levels was further slowed. In 1999, the average collectively-agreed pay of an east German employee was 91.5% of the west German level. Calculated on an annual basis, sectoral increases in collectively-agreed pay varied between 1.9% and 3.6% (see table 2). In almost all sectors, collectively-agreed pay increases were significantly higher in 1999 than in the previous year, when the average increase was only 1.8%. With an inflation rate of 0.6%, many employees received notable increases in real pay in 1999.

* Increases against the previous year.

Source: WSI Collective Agreement Archive 1999.

According to the Federal Statistical Office, however, on average, overall wages and salaries throughout the German economy rose by only 2.2% in 1999. This discrepancy is a result of the "negative wage drift" whereby many employees who are not covered by a collective agreement receive significantly lower pay increases than those who are covered by agreements. In 1998: only 68% of west German employees and 51% of their eastern counterparts were covered by branch-level collective agreements; 8% of west German and 13% of east German employees were covered by a company agreement; and 24% of west German and 37% of east German employees were not covered by any collective agreement (figures based on the representative data of the establishment panel of the Institute for Employment Research (Institut für Arbeitsmarkt und Berufsforschung, IAB)) (DE9905111N).

Following reductions of wage taxes and social security contributions, German labour costs increased by some 1.9% in 1999. Since labour productivity rose by 1.1%, unit labour costs consequently increased by 0.8%, while during the two previous years they had decreased (in 1997 by 0.8% and in 1998 by 0.4%). For the first time since 1992, the average figure for collectively-agreed pay increases of 3% exceeded the "cost-neutral margin of distribution" (kostenneutraler Verteilungsspielraum) which is the rate of inflation (0.6%) plus the increase in labour productivity (1.1%). As a result, employees' share of national income (the "wage quota") increased from 70.9% in 1998 to 71.4% in 1999.

Working time

Since the 1999 collective bargaining round was almost a pure "pay round", there were almost no changes in working time. In 1999, collectively-agreed average working time in west Germany remained at 37.5 hours per week while in east Germany average working time was 39.2 hours per week (see table 3). However, although it was not included in any agreements, working time reduction was an important issue in the political debates among the bargaining parties. The unions still argued for further working time cuts and IG Metall campaigned particularly strongly for a shortening of lifelong working time through the introduction of new collectively-agreed early retirement schemes (DE9910217F). On the other hand, employers' associations demanded more working time flexibility, while there were some calls for a return to the 40-hour week (DE9912227N).

In banking, the bargaining parties were unable to conclude a new collective agreement, since the unions did not accept employers' demands for the inclusion of Saturday as a regular working day. Unions and employers' associations also have opposing views on the question of a further extension of shop opening hours (DE9912230F).

Source: WSI Collective Agreement Archive 1999.

Equal opportunities

There were no significant developments in the area of equal opportunities in collective bargaining in 1999.

Job security

A number of initiatives aimed at creating and safeguarding employment have been carried out within the tripartite "Alliance for Jobs, Training and Competitiveness" forum (see above). In a joint declaration on the establishment of the Alliance (DE9812286N), the parties involved stated that a positive development of the labour market requires a close and permanent cooperation between the state, trade unions and employers' associations. As primary objectives, all parties involved agreed on the need for:

• a permanent reduction of non-wage labour costs and a structural reform of the social security system;
• an employment-promoting distribution of work and flexible working time arrangements;
• a reform of corporate taxation, with particular tax reductions for small and medium-sized companies;
• the improvement of the innovative capacities and competitiveness of companies;
• the creation of improved access to early and partial retirement;
• a collective bargaining policy which supports the creation of employment;
• the development of new fields of employment for low-skilled workers; and
• the extension of labour market policy to fight youth and long-term unemployment.

Training and skills development

In 1999, numerous meetings of some 10 topic-related working groups, as well as three sets of top-level talks, took place within the framework of the Alliance for Jobs. Very few concrete results had emerged from those meetings by the end of the year. However, in a joint statement, which was adopted in the third round of top-level talks in July 1999, the parties involved agreed on a "consensus on career training" (Ausbildungskonsens), which included a broad range of activities to make sure that every young person will find a vocational training place (DE9907219F).

Evaluations of the 1999 round

The social partners made differing evaluations of the 1999 collective bargaining round. For most employers' associations, the 1999 round was a symbol of "stagnation" in the overall process of reforming the German bargaining system. They sharply criticised the withdrawal from a policy of wage moderation as well as the reintroduction of a "collective bargaining convoy", whereby all sectors follow the pattern of the metalworking industry. In order to reduce the worryingly high number of unemployed people, employers are demanding a return to a policy of wage restraint and more differentiated wage developments between sectors, companies and groups of employees.

On the trade union side, opinions were somewhat divided. On the one hand, several sectoral unions, in particular IG Metall, called for a "U-turn" in German bargaining in order to guarantee employees a "fair share" in the overall creation of wealth. On the other hand, DGB adopted a joint paper with BDA within the framework of the Alliance for Jobs, in which both parties agreed in principle to a further flexibilisation and decentralisation of the bargaining system, as well as on the "priority use of productivity increases for employment" (DE9907219F). Although the same formulation was accepted within the national Alliance for Jobs as a guideline for the 2000 bargaining round, it is still rather unclear what it means in practice, since there are still very different conceptions of the relationship between wages and employment.

Legislative developments

On 1 January 1999, a package of labour law amendments came into force, largely arising from the wish of the new red-green government to revoke some of the more controversial changes introduced by its conservative-liberal predecessor (DE9901291N). The new amendments contained provisions in the following areas:

• continued payment in the event of sickness. The new government has reintroduced the payment of 100% of previous remuneration from the first day of sickness. In 1996, the former government had reduced "sick pay" to 80% of the previous wage;
• dismissal protection. The new government also reintroduced full dismissal protection for all workers in companies with more than five employees. The former government had limited comprehensive dismissal protection to companies with more than 10 employees. In addition, the new government extended the so-called "social criteria" (such as age, length of service and family situation) which have to be recognised by employers in the event of redundancies; and
• posted workers. In order to fight social and wage "dumping" in the German construction industry, the new government extended the Posted Workers Act for an unlimited period (the former Act was set to expire in August 1999). Furthermore it broadened the content of the Act, which was previously limited to making obligatory certain minimum wages, to all provisions of the collective agreements in the construction industry. Finally, the new government sharply increased the maximum fines for employers which violate collective agreements (up from DEM 500,000 to DEM 1 million) and added a new provision which makes user companies responsible when their subcontractors contravene collectively-agreed standards.

In June 1999, the federal government and the bargaining parties in the construction industry reached an agreement on the principles of a new regulation of the bad-weather allowance (Schlechtwettergeld) (DE9906217N). A new law, which came into force from 1 November 1999, sought to provide better protection of construction workers during the winter period, when there are temporary work stoppages due to bad weather.

In August 1999, the Federal Ministry of Labour issued a directive which declared new collectively-agreed minimum wages for construction workers to be "generally binding" – ie applying also to non-organised and to foreign employers and employees in the industry (DE9909117F). The Ministry thus used the provisions of the new Posted Workers Act (see above).

In April 1999, the Federal Labour Court (Bundesarbeitsgericht, BAG) issued a judgment which acknowledged the right of trade unions to bring a court case against employers which they accuse of operating a company arrangement that contravenes a collective agreement in force (DE9908214F). In recent years, Germany has seen a growing number of so-called "employment pacts" at establishment level between management and works councils (DE9902293F), some of which more or less openly contravene collective agreements. While previously it was only individual employees who could bring such cases to court, the Court has now extended this right to unions.

The organisation and role of the social partners

In the second half of the 1990s, German trade unions entered into a period of reorganisation, including a wave of union mergers. In November 1999, five service sector unions agreed to merge and form the United Service Sector Union (Vereinigte Dienstleistungsgewerkschaft, Verdi) (DE9911225F). The unions concerned are:

• the Public Services, Transport and Traffic Union (Gewerkschaft Öffentliche Dienste, Transport und Verkehr, ÖTV);
• the German White-Collar Workers' Union (Deutsche Angestellten-Gewerkschaft, DAG);
• the Postal Workers' Union (Deutsche Postgewerkschaft, DPG);
• the Commerce, Banking and Insurance Union (Gewerkschaft Handel Banken und Versicherungen, HBV); and
• the Media Union (IG Medien).

The official establishment of Verdi is planned for spring 2001. It will be the world's largest single union, with around 3.2 million members (on current figures), representing more than 1,000 occupations.

One major reason for the ongoing organisational restructuring of German trade unions has been the dramatic losses in membership during the 1990s (DE9908113F). From 1991 to 1998, German unions lost almost 3.5 million members, equal to some 30% of their membership (see table 4). As a result, union density decreased from 41% after German unification in 1991 to 32% in 1998.

The organisational problems of German unions become even more obvious when the structure of DGB membership is considered. At the end of 1997, for example, nearly 19% of the DGB affiliates' members were pensioners. By contrast, the proportion of young union members under the age of 25 decreased from 11.3% in 1991 to 6.4% in 1996. While DGB is still relatively strong in terms of organising male, full-time, blue-collar workers in manufacturing and public services, the unions have considerable problems in organising female, white-collar and part-time workers as well as workers in private sector services. Thus, the membership structure of the DGB arguably corresponds more to the industrial society of the 1960s than the service society of the beginning of the 21st century.

DGB = Deutscher Gewerkschaftsbund; DBB = Deutscher Beamtenbund ; DAG = Deutsche Angestellten Gewerkschaft; CGB = Christlicher Gewerkschaftsbund .

Source: Trade unions and Institut der deutschen Wirtschaft ( IW ) ( DE9908113F ).

Organisational developments within employers' associations have been closely related to the ongoing restructuring process of the German branch-level collective bargaining system. During the 1990s, a number of individual companies have withdrawn from employers' associations in protest at the contents of collective agreements. Since most German employers' associations do not publish accurate membership figures, it is rather difficult to gain a clear picture of organisational developments. The decrease in collective bargaining coverage, however, indicates that some employers' associations have also been confronted with growing membership problems.

The metalworking employers' association, Gesamtmetall, for example, has argued for several years for a further decentralisation of bargaining which transfers more responsibility for terms and conditions to the company level. Some of the regional Gesamtmetall affiliates have founded new parallel metalworking employers' associations which will not participate in industry-level bargaining. This trend began in 1997, when the Gesamtmetall affiliate Nordmetall- which represents 350 enterprises in the states of Hamburg, Schleswig-Holstein and Mecklenburg-Vorpommern- founded an employers' association called Arbeitgeberverband Norddeutschland which neither concludes, nor is bound by, industry-level collective agreements (DE9712142N). After the conclusion of the 1999 metalworking agreements, similar developments took place in Rhineland-Palatinate (DE9904106N). Furthermore, in North Rhine-Westphalia, the regional metalworking employers' association (Verband der Metall- und Elektro-Industrie Nordrhein-Westfalen, METALL NRW), demanded a debate on ways in which to allow member companies to escape from branch-level collective bargaining but at the same time enjoy the solidarity of, and integration into, an employers' association.

Industrial action

In 1999, there were no major strikes or industrial action at branch level. However, some branch-level collective bargaining was accompanied by warning strikes. In metalworking, for example, more than 1 million employees (according to IG Metall figures) participated in some form of industrial action during the bargaining round during the early part of 1999 (DE9903295F). Warning strikes also accompanied bargaining in other sectors, including public services, the steel industry, printing, private transport and insurance. In June 1999, more than 15,000 banking employees held a central demonstration in Frankfurt rejecting employers' demands for the introduction of Saturday as a regular working day. In October 1999, more than 60,000 employees in public services went to Berlin to demonstrate against government plans to limit pay increases for Germany's 2 million or so career public servants (Beamte) to the level of inflation over the next two years (DE9910218N).

In addition, there were several cases of industrial action at company level – within the context of either company bargaining or company restructuring. The most spectacular case was a five-week site occupation at Alcatel in Berlin which the workers staged in protest against management's decisions to make 140 of the 170 workers at the plant redundant (DE9912229F).

In early 2000, there were no precise strike figures for 1999 available. In 1998, the total number of working days lost through industrial action was 16,102, while the number of workers involved in action was 4,286.

National Action Plan (NAP) for employment

The 1999 German National Action Plan (NAP) for employment, in response to the EU Employment Guidelines, was presented in June 1999. According to the government, the provisions of the Plan broadly reflect the debates and outcomes of the various tripartite working groups within the Alliance for Jobs. Although there is no specific body or forum dealing with the NAP, the government discussed the plan as a whole with employers' associations and trade unions before it was passed on to the European Commission.

The impact of EMU on collective bargaining and industrial relations

The impact of the EMU on collective bargaining and industrial relations was a prominent issue in debates within social partner organisations in 1999. The two sides, however, drew rather different conclusions from the launch of the third stage of EMU and the single currency. According to German employers' associations, increased competitive pressure under the conditions of EMU make further cost reductions and flexibilisation of labour market regulation necessary.

By contrast, German trade unions have emphasised the need for a "Europeanisation" of collective bargaining and industrial relations and have started to develop new forms of cross-border trade union cooperation. In September 1998, as an explicit reaction to the introduction of the euro, a number of unions from Benelux countries and Germany adopted the "Doorn declaration", which includes a set of joint bargaining guidelines. In order to prevent possible downward competition on wages and working conditions, the unions concerned agreed that bargaining outcomes should at least be equivalent to "the sum total of the evolution of prices and the increase in labour productivity" (DE9810278F). In September 1999, at a follow-up meeting of the "Doorn initiative", the unions involved evaluated the 1999 bargaining round in the countries concerned and stated that bargaining outcomes met the guidelines set out in the Doorn declaration (DE9909215N).

IG Metall continued in 1999 to establish transnational collective bargaining partnerships between its district organisations and counterpart unions in neighbouring countries (DE9904298F and TN9907201S). In some districts, for example North Rhine-Westphalia or Northern Germany, representatives from neighbouring countries' metalworkers' unions participated as observers in the German metalworking bargaining round. Similar initiatives for interregional cross-border trade union cooperation were also taken in the construction sector, for example by German and Polish construction workers' unions (DE9911223N). Other cross-border cooperation agreements were prompted by major cross-border mergers such as that between Hoechst and Rhône-Poulenc, which led to a cooperation agreement between German and French chemical workers' unions (DE9905201N).

The new macroeconomic framework of EMU has also had an influence on trade unions' wage claims and other bargaining demands. In particular, IG Metall has recognised that it has a wider responsibility for wage developments within the "euro-zone" and that it must conclude wage increases which correspond to productivity increases in order to prevent transnational downward competition. Against this background, German unions sharply criticised the European Central Bank and the European Commission for their recommendations that a policy of wage restraint should be followed (DE9903296N).

Employee representation

In 1999, there were no legislative developments in the area of employee representation. Following the announcement by the federal government in its 1998 coalition agreement that a modernisation of the Works Constitution Act (Betriebsverfassungsgesetz) would be undertaken (DE9811281F), there has been a continuing debate on this issue among the social partners. It is expected that the government will present a draft for a new Act in 2000.

Against the background of a growing number of cross-border mergers and acquisitions, German unions have demanded better protection of German co-determination rights. This debate was highlighted by the merger of Hoechst and Rhône-Poulenc, in addition to Vodafone's hostile takeover bid for Mannesmann in late 1999 (DE9911220F). German unions have also criticised the failure so far to introduce a European Company Statute containing sophisticated co-determination rights.

New forms of work

Since the beginning of the 1990s, Germany has seen an accelerated introduction of new forms of work organisation as well as broad debates among employers and trade unions about the consequences of this for industrial relations. However, there is no homogeneous trend towards a single model of new work organisation, but rather a great variety of organisational concepts. While some companies have conducted experiments with relatively innovative "post-Taylorist" forms of work organisation, other companies have introduced more conservative concepts with only slight changes to the "Taylorist" division of labour. Since Germany is still far from witnessing an overall extension of new forms of work organisation, there are currently also tendencies towards a "return to Taylor", resulting in a broader extension of "shareholder-value" concepts and a revival of short-term thinking within management (DE9903288F).

Although all parties within the Alliance for Jobs have demanded the "creation of more part-time work and the development of new models to make such work more attractive" (DE9907219F), there were no significant legislative or collectively-agreed initiatives which explicitly targeted the promotion of part-time work in 1999. In 1998, some 14% of German employees worked part-time (3% of male and 28% of female employees).

The year's most important legislative change regarding "atypical" forms of work was an Act on "marginal part-time employment" (geringfügige Beschäftigung), which came into force on 1 April 1999. The aim of this law was to limit the expansion of marginal part-time work (defined as work with maximum monthly pay of DEM 630) and the reintroduction of social security contributions for these employees. At the same time, marginal part-time employment was exempted from taxes.

In addition, a new Act on the regulation of "bogus self-employment" (Scheinselbständigkeit) came into force on 1 January 1999, aiming to improve the social rights of people who are formally self-employed, but in reality act as dependent employees. It also brought them into the social security system.

Outlook

The change in the federal government in autumn 1998 had a significant influence on the development of German industrial relations in 1999 in several respects. First, the new federal government introduced a number of new labour laws, most of which improved the situation of employees. Second, examining the outcomes of the 1999 collective bargaining round, there were significant increases in real wages which marked a slight change from the very moderate wage developments in previous years. Third, with the creation of the national Alliance for Jobs, a new "corporatist" approach was established in Germany.

Whether or not the new Alliance will be a real success, in terms of the creation of new employment and the improvement of industrial relations, remains an open question. On 9 January 2000, after the fifth top-level meeting of the Alliance, a joint agreement was presented in which the parties recommended "discussing a long-term employment-oriented wage policy at the forthcoming round of talks in 2000". The agreement states further that the "margin for wage increases based on productivity growth will be used primarily for job-creating agreements". As a possible element of such agreements, the document mentioned "job-creating early retirement".

The Alliance for Jobs thus appeared to find a compromise based on a political exchange of wage restraint against early retirement arrangements. The discussions in the run-up to the 2000 collective bargaining round, however, made clear that this is only a very vague compromise, open to rather different interpretations by the social partners. While the employers' associations see the Alliance's declaration as a request for long-term agreements with only moderate wage increases, the trade unions insist on the full "cost-neutral margin of distribution" (the sum of increases in prices and productivity) being used for both wage increases and further redistribution of work through early retirement and other provisions for shorter working time. Whatever the outcome of the 2000 bargaining round, it will definitely have a major impact on the future of the Alliance and the fundamentals of German industrial relations.