New agreements signed for public sector, Deutsche Post, Postbank and Deutsche Telecom

February and March 1999 saw a new collective agreement for Germany's 3.2 million public sector employees, as well as deals at a number of recently privatised service companies - Deutsche Post, Postbank and Deutsche Telekom.

The early months of 1999 saw the conclusion of a new collective agreement for Germany's public sector, along with agreements in several recently privatised services.

Public services

On 27 February, a collective agreement was concluded for the 3.2 million German public sector employees. The agreement is valid until 31 March 2000 and includes the following:

• a pay increase of 3.1% from 1 April 1999;

• an additional one-off payment of DEM 300 for the period from 1 January to 31 March 1999. In eastern Germany, the one-off payment will amount to 86.5% of the west German level; and

• the extension of the current freeze of the annual "13th month's pay" (13. Monatseinkommen) bonus until 1 April 2000.

A further area dealt with was working time flexibility. It was agreed that flexible ways of arranging working time are necessary in order to adjust to changing demands by citizens on the administration and companies. At the same time, working time arrangements have to meet the organisational requirements of the administration and establishments and to allow for greater time "sovereignty" for employees. Both parties agreed to conclude a collective agreement on working time accounts and working time "corridors" by 31 July 1999. Standard weekly working hours will remain at 38.5 for western Germany and 40 for eastern Germany. In addition, the employers committed themselves to maintaining the present number of vocational trainees and declared that there will be no disciplinary measures for employees who participated in the warning strikes related to the bargaining round.

Originally, the salaried employee's trade union (Deutsche Angestelltengewerkschaft, DAG) and the public sector and transport workers' union (Gewerkschaft Öffentliche Dienste, Transport und Verkehr, ÖTV) had demanded pay increases of 5.5%. During the negotiations, ÖTV dropped its demands for more vocational training places and for employer guarantees to take on vocational trainees after completion of their training.

Deutsche Post

On 28 February, the postal services company, Deutsche Post AG, and the postal workers' union, Deutsche Postgewerkschaft (DPG) agreed a 3.1% pay raise from 1. April 1998, and an additional one-off payment of DEM 500 for the period from 1 January to 31 March 1999. The agreement has a duration of 15 months and covers 170,000 blue-collar workers and salaried employees.

Postbank

On 1 March 1999, an agreement was concluded between Postbank and DPG. The parties agreed a 3.1% pay raise from 1 April 1999, and an additional one-off payment of DEM 500 for the period from 1 January to 31 March 1999. The agreement has a duration of 15 months and covers 5,000 blue-collar workers and salaried employees.

Deutsche Telekom

Also on 1 March 1999, Deutsche Telekom AG and the trade unions reached a deal in the 1999 wage negotiations for Telekom's 90,000 employees. The agreement provides for a 2.8% pay rise for 1999, and an additional one-off payment of DEM 300 for the period from 1 January to 31 March 1999. The collective agreement has a duration of 15 months and thus applies until 31 March 2000. In addition, Deutsche Telekom has agreed to take on its 1,000 or so trainees who complete their training in 1999, who can later be deployed within the Deutsche Telekom Group according to demand. Flexible working time will be introduced through the use of individual flexitime accounts. The objective of these accounts is that the agreed number of working hours should be attained over a period of 18 months, according to operational requirements. This measure is regarded as an important instrument for the reduction of overtime. The details are to be settled by the parties to the wage agreement by 30 September 1999. Should Deutsche Telekom decide to issue a second tranche of shares, an employee stock-ownership plan is to be set up, as on the occasion of the previous issue. Each employee will then be able to acquire shares at a reduced price.

Commentary

The public sector deal itself is rather traditional, stipulating mainly pay increases. However, there are small signs of changes and innovation regarding the flexibilisation of working time. The agreements at Deutsche Post, Postbank and Deutsche Telekom show the influence of the public sector agreement.

Before and during the public sector bargaining round, the trade unions had frequently repeated that the maintenance and creations of jobs was their first objective. Given this aim, the impact of the agreement seems somewhat questionable. Otto Schily, Federal Minister of the Interior, estimates that the deal will cost public employers (and thus the tax payers) a substantial DEM 6 billion - rising to DEM 10 billion if the agreement is extended to the 1.8 million public civil servants - and is thus at the limit of the load-bearing capacity of public budgets. The additional expenses will be borne through cuts in other budget areas. Furthermore, the minister did not want to exclude personnel reductions as a reaction to the agreement. As the share of labour costs in total costs is much higher in the public sector than in the manufacturing sector, the public sector might react by increasing charges, taxes or public debt and/or reducing personnel, especially in the local authorities, which already suffer from budgetary strains. (Stefan Zagelmeyer, IW Köln)