2000 Annual Review for Germany

This record reviews 2000's main developments in industrial relations in Germany.

Political developments

Since the most recent 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 Alliance 90/The Greens (Bündnis 90/Die Grünen). The coalition parties were confronted with considerable political difficulties in 1999 - including losses in almost all important regional elections - but regained a much stronger political position in 2000. This was partly the result of far-reaching financial scandals within the main opposition party, the Christian Democratic Party (Christlich Demokratische Union, CDU) which thereby underwent a deep political crisis. Against this background, the red-green parties won the two major regional elections in 2000, in the federal states of Schleswig-Holstein and North-Rhine Westphalia.

Another reason for the comparatively strong political position of the government has been the relatively robust economy, which led to a 3.1% increase in GDP in 2000 and a reduction in unemployment of 210,000 to an average level of 3.9 million. The government's major political project in 2000 was a comprehensive tax reform which led to major tax cuts, in particular for companies but also (to a lesser extent) for employees. A further important political problem was the growing number of violent attacks against foreigners in Germany, which led to various initiatives against xenophobia and right-wing extremism, including joint action by trade unions and employers' associations (DE0008277F).

Collective bargaining

The 2000 collective bargaining round was very much influenced by the national tripartite "Alliance for Jobs" (Bündnis für Arbeit) forum, which adopted a joint statement on an "employment-oriented bargaining policy" in January 2000 (DE0001232F). This was the first time in German history that a national tripartite institution had issued recommendations for a forthcoming bargaining round. The Alliance's joint statement called for a "longer-term collective bargaining policy", whereby the available "distributive margin" should be based on productivity and should be primarily used for job-creating agreements. The joint statement also called for job-creating early retirement on acceptable terms for the persons concerned. Although, in legal terms, the Alliance's recommendations were of a non-binding nature only, because German bargaining is based on the principle of collective bargaining autonomy, de facto they had a strong political influence on the 2000 bargaining round, which mainly resulted in very moderate pay increases and improved provisions for partial retirement.

Altogether, 54,940 valid collective agreements were officially registered by the Ministry of Labour at the end of 2000, of which 33,357 were "association agreements" concluded between trade unions and employers' associations and 21,583 were company agreements concluded between trade unions and individual employers. Although the number of company agreements has shown a steady increase since the beginning of the 1990s, more than two-thirds of German employees are still covered by a sectoral agreement.

In 2000, the controversial debate concerning the German collective bargaining system continued. In February, the main employers' and business associations demanded changes in the Collective Agreement Act in order to redefine of the so-called "favourability principle" (Günstigkeitsprinzip), whereby departures from regulations laid down in collective agreements are possible only when they are in favour of the employee (DE0002238F). According to the employers, it should be legally possible for companies to diverge from collective agreements in order to safeguard or promote employment. Both trade unions and the government, however, have clearly rejected this demand.

Pay

In 2000, trade unions affiliated to the German Federation of Trade Unions (Deutscher Gewerkschaftsbund, DGB) concluded new collective pay agreements for some 18.4 million employees. Initially, the unions demanded total increases of between 4% and 5.5%, including both pay rises and financial contributions to new arrangements for partial and early retirement (DE0003243N). Most employers' associations sharply rejected these demands, and the majority of pay agreements subsequently provided for pay rises of between 2% and 3% in 2000 - for details see table 1. Moreover, many of the sectoral pay agreements run for two years and also determined pay rises for 2001, which are between 2% and 2.5% under a majority of the agreements.

Source: WSI Collective Agreement Archive 2000

According to the WSI Collective Agreement Archive, in 2000 the average increase in collectively-agreed pay was 2.4%. For the first time, increases in east German pay levels (2.3%) were slightly below the increase in west German levels (2.4%), which was mainly a result of an extensive pay freeze in the east German construction industry. In 2000, the average collectively-agreed pay of an east German employee was 91.9% of the west German level. Sectoral increases in collectively-agreed pay varied between 1.6% and 3.0% - see table 2. In most sectors, collectively-agreed pay increases were significantly lower in 2000 than in 1999, when the average increase was 3.0% but slightly higher than in 1998 when the average increase was only 1.8%. With an inflation rate of 2.0% and an increase in labour productivity of 3.0% in 2000, pay increases were very moderate and far below the "cost-neutral margin of distribution" (kostenneutraler Verteilungspielraum) (ie the sum of the increases in prices and productivity) of 5%. As a result, there will be a further redistribution from labour to capital income and a further decline of the "wage share" - ie the share of labour income in national income.

* Increases against the previous year.

Source: WSI Collective Agreement Archive 2000.

Working time

There were almost no changes in weekly or annual working time as a result of the 2000 collective bargaining round. In 2000, collectively-agreed average working time 37.4 hours per week in west Germany and 39.1 hours in east Germany. About 34% of west German employees but only 6% of their eastern colleagues worked 37 hours per week or less - for details see table 3. Average annual working time was 1,642 hours in west Germany and 1,727 in the east.

Source: WSI Collective Agreement Archive 2000.

Apart from pay rises, the issue of the reduction of life-long working time through improved partial retirement was the most prominent topic in the 2000 bargaining round. In many sectors, new collective agreements were concluded on partial retirement which contain various improvements to existing regulations, such as:

• the introduction of an individual right for employees to take partial retirement;
• the extension of the possible partial retirement period;
• the introduction of partial retirement for part-time employees; or
• the introduction of some financial compensation for employees' losses in statutory pension rights as a result of partial retirement.

In October 2000, Germany's first sectoral agreement on "working-life time accounts" was signed in the steel industry (DE0011290N). The agreement essentially offers employees the possibility of saving overtime pay over a long period by paying it into an account. This money can be used to finance either a period of time off, early retirement or an additional pension.

Job security

Although trade unions and employers' associations agreed a joint recommendation for an "employment-oriented bargaining policy" within the framework of the Alliance for Jobs (see above), the two sides continue to have rather differing views on the effects of collective bargaining on employment. Employers see the issue of wage restraint as most important for safeguarding and promoting employment. By contrast, the unions hope to secure and create jobs, especially for younger workers, through the conclusion of attractive early retirement schemes for older workers.

More explicit agreements on job security have been concluded at company-level. In June 2000, for example, the rail workers' trade union TRANSNET and the board of Deutsche Bahn AG agreed to an extension of the company's "pact for jobs" until the end of 2004 and to a new social fund to finance extra payments for staff, linked to the railway company's privatisation and reorganisation (DE0006269F).

Training and skills development

Many sectoral agreements included new provisions on the promotion of vocational training and determined a certain period of time during which vocational trainees must be taken on at the end of their training (see table 1). In many agreements, this period was extended from six to 12 months.

Legislative developments

New regulations on partial retirement came into force on 1 January 2000. The most important change is that part-time employees are also entitled to take partial retirement if their working time remains above a certain threshold. Furthermore, the financial subsidy from the Federal Labour Office (Bundesanstalt für Arbeit) for filling the job partially vacated with a new employee has been improved. The new provisions set the basis for new collective agreements on partial retirement (see above under "Working time")

In April 2000, the cabinet passed new provisions related to the Severely Disabled Persons Act (Schwerbehindertengesetz, SchwbG), which came into force on 1 January 2001. The new "Act to fight unemployment among persons with disabilities ("Gesetz zur Bekämpfung der Arbeitslosigkeit Schwerbehinderter, SchwbBAG) aims to ensure the employment of about 50,000 unemployed people with disabilities by October 2002.

In July 2000, the German parliament (Bundestag) adopted a revision of the Federal Childcare Payment and Parental Leave Act (Bundeserziehungsgeldgesetz, BErzGG) which contains new provisions on parental leave and childcare payments (DE0007271F). The new act came into force on 1 January 2001. The most important changes on parental leave are that:

• from the beginning of 2001, both parents are allowed to take parental leave at the same time;
• the permitted level of part-time work during parental leave is extended from 19 to 30 hours per week;
• parents have the right to work part time for between 15 and 30 hours per week, with employers permitted to reject such requests only if this creates considerable problems for the company. After the period of parental leave, the employees concerned have the right to return to full-time work; and
• parents have the opportunity to postpone the third year of parental leave until the eighth birthday of the child.

Concerning childcare payments, the upper limits of net annual income, below which parents are entitled to a full childcare benefit payment, have been increased by 9.5% for parents with one child and 11.4% for lone parents with one child for the period from the seventh month after the child's birth.

In November 2000, parliament passed a new Act on part-time work and fixed-term employment relationships (Gesetz über Teilzeitarbeit und befristete Arbeitsverträge) which came into force on 1 January 2001 (DE0011293F). Among other provisions, the new law introduces a right for workers in companies with more than 15 employees to reduce their working time, as long as no internal company reasons prevent such a reduction, and restricts the possibilities for concluding fixed-term employment contracts.

The organisation and role of the social partners

The official role of social partners in Germany gained new importance through the Alliance for Jobs, which was established as a new permanent tripartite arrangement at national level in December 1998 (DE9812286N). In 2000, the Alliance continued its work and produced joint statements or reports on: collective bargaining policy (DE0001232F); working time policy (DE0005261F); and vocational training and lifelong qualification (DE0007272F). Further, in May 2000, the Alliance agreed on the introduction of pilot projects on wage subsidies for long-term unemployed people and those with a low level of skills in four federal states (DE0005260F).

However, there has been continuing criticism of the Alliance among both the employers' associations and the trade unions. Within the employers' camp, more positive evaluations seem to dominate, mainly because of the Alliance's disciplining effects on pay developments. Within the unions, there has been considerable controversy over the usefulness of the Alliance following the decision of two DGB-affiliated trade unions, the Media Union (IG Medien) (DE0010285N) and the Commerce, Banking and Insurance Union (Gewerkschaft Handel Banken und Versicherungen, HBV) (DE0012296N) to opt out of the Alliance.

In terms of organisational changes, the most important development was the preparation of a trade union merger to create a new Unified Service Sector Union (Vereinigte Dienstleistungsgewerkschaft, Ver.di), which is officially planned for March 2001 (DE9911225F). There are five unions involved in this merger: 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 Post Workers' Union (Deutsche Postgewerkschaft, DPG); the Commerce, Banking and Insurance Union (Gewerkschaft Handel, Banken und Versicherungen, HBV); and the Media Union (IG Medien). While IG Medien, DAG, DPG and HBV approved the foundation of Ver.di in 2000 (DE0012295N), there was still a strong minority within ÖTV which tried to block the merger (DE0011292F). ÖTV was due to take its final decision on the issue at an extraordinary congress in March 2001, with the support of at least 80% of delegates required to approve the merger.

In November 2000, the unions concluded an agreement on guidelines for cooperation between DGB-affiliated unions after the establishment of Ver.di and the consequent integration of DAG into DGB. (DE0012297F). The deal seeks to clarify the responsibility for organising particular sectors and companies between DGB affiliates, in particular in new sectors such as telecommunications and information technology.

Industrial action

There were no major strikes or industrial action at branch level in 2000. However, some branch-level collective bargaining was accompanied by warning strikes, strike ballots or other forms of industrial action, which came to a head in two cases:

• in the public sector, trade unions organised a strike ballot, in which more than three-quarters of union members voted for a strike. Just before the unions were ready to call a strike, the bargaining parties reached a "last-minute compromise" over new collective agreements in June (DE0006268F); and
• in the textiles and clothing industry, the IG Metall metalworkers' union initiated warning strikes following the employers' refusal to support an agreement guaranteeing an entitlement to partial retirement. In September, some 13,000 employees participated in protest actions. In some areas, these protests escalated after a number of enterprises responded with lock-outs. However, just before IG Metall initiated strike ballots and prepared for industrial action, an agreement was reached (DE0010284N).

Collective bargaining was accompanied by warning strikes and nationwide protests in: east German metalworking (March); Deutsche Bahn AG (March) (DE0004253N); printing and paper processing (May) (DE0006266N); the retail trade in North-Rhine Westphalia, Bavaria, Rhineland-Palatine and Baden-Württemberg (June/July) (DE0008275N); and the Ufa and CinemaxX cinema companies (September to December)

National Action Plan (NAP) for employment

There is no special institution through which the German government involves social partners when drawing up its NAP in response to the EU Employment Guidelines. Instead, the government sees the national tripartite Alliance for Jobs as the central framework for involving the social partners in employment-creating policies, which also includes the issues raised in the NAP. The 2000 NAP as such, however, did not play a prominent role in public debate.

Equal opportunities and diversity issues

In June 1999, the government adopted a programme entitled "Women and occupation" (Frau und Beruf), under which equal opportunities policies should be promoted and integrated in all political fields (a gender mainstreaming approach). Concrete measures within the programme include:

• a statutory basis for equal opportunities for men and women;
• a governmental report on pay discrimination against women;
• promotion of women's employment;
• political support for mothers and fathers through better opportunities for reconciliation of work and family;
• equal opportunities in the sciences;
• improving the prospects of women setting up a business; and
• promotion of good practice in equal opportunities

Through the revision of the federal childcare payment and parental leave act and the new act on part-time work (see above under "Legislative developments"), the government aims to improve the framework for women's careers and thereby promote equal opportunities.

In September 2000, the outline of a forthcoming draft bill on equal opportunities between men and women in the private sector was presented by the Federal Minister for Families, Senior Citizens, Women and Youth (DE0009282F). It is proposed that private enterprises would be obliged to take measures to achieve equal opportunities for women and men. The law would consist of two stages:

1. within enterprises, company management and employee representatives and/or the social partners, would have the opportunity to reach agreements meeting at least minimum standards set by the law. This should allow enterprises to introduce measures which are tailored to their own requirements; and
2. companies which are not able, or willing, to reach their own agreements within a time limit of about three years would be obliged to adopt the rules laid down by the law. These rules would be more restrictive than the minimum standards for independent agreements.

A draft bill is expected to be presented in 2001.

In early 2000, the Hans Böckler Foundation launched a new women's forum, the "Equality Group", with the aim of promoting the inclusion of women's interests in the tripartite Alliance for Jobs (DE0012298F). The background is that the vast majority of participants in Alliance meetings are men and that women's interests or gender aspects are seen as having have been ignored in the documents published to date. With more than 200 women working in eight working groups on different topics by December 2000, the Equality Group may be able to raise awareness of women's interests.

Concerning the integration of people with disabilities, the Federal Labour Office decided in April on a new programme to reduce unemployment among this group. This programme, called "Occupational integration of severely disabled persons" (Berufliche Integration Schwerbehinderter), aims at strengthening public solidarity with people with disabilities and is directly linked to changes in the law (see above under "Legislative developments"). Employers are to receive technical and financial support if they provide jobs for this group of people. It is hoped that this will serve to create some 50,000 new jobs. The programme is supported by the social partners.

Information and consultation of employees

In December 2000, the Ministry of Labour presented a first draft of a revision of the Works Constitution Act, which governs the establishment and operation of works councils, unleashing a considerable degree of controversy amongst the social partners (DE0102242F). While the trade unions strongly supported the initiative as a necessary modernisation to bring the legislation into line with the modern organisation of work, the employers' associations sharply rejected any attempts to extend works councillors' participation rights. Under the draft of the new act, participation rights for works councillors would be extended to the fields of training and job security, environmental protection, promoting equal opportunities for women and fighting xenophobia at the workplace. Furthermore, the setting up of works councils should be made easier, particularly in smaller companies. It is expected that a new act will be adopted in 2001

As far as European or international aspects are concerned, several German-based multinationals concluded framework agreements on the worldwide observance of fundamental social standards in 2000 - notably Faber-Castell (writing, drawing and painting products) and Hochtief (construction) (DE0004249N) and Freudenberg (component manufacturing) (EU0008267F). Furthermore, in January 2000 the management and European Works Council (EWC) at Ford- with strong involvement of the German metalworkers' union IG Metall - signed an agreement regulating the conditions to apply to employees of Visteon, Ford's components operation, in the event of it becoming independent (DE0004254N). This was thought to be the first time that an EWC had been accepted by the management of a multinational company as a bargaining partner in this way. Finally, while the German trade unions welcomed the agreement on the worker involvement aspects of the European Company Statute at the Nice European Council in December 2000 (EU0012288F), the German employers' associations took a more critical view, since they fear that the high level of German co-determination could become a disadvantage for German companies which want to create a European Company with foreign partners.

New forms of work

The German government aims to promote both the advantages of, and opportunities to, telework, in addition to seeking a broader acceptance of this kind of work in order to create new jobs. To this end, it has set up a special programme for the promotion of teleworking in small and medium-sized companies. In 1999, the proportion of teleworkers in the workforce was between 2% and 6%, and 41% of teleworkers were women. Currently, teleworking is mostly carried out by managers and experts. Most teleworkers are highly educated.

A further development of relevance to the analysis of new forms of work is that new legislation on "marginal part-time employment", passed in 1999, means that it is now possible to evaluate the number of marginal (ie small-scale) part-time workers. According to the Federal Ministry of Labour, there were about 4 million marginal part-time workers in 2000.

Other relevant developments

On 10 March, the federal government decided to issue 10,000 limited work permits, with a duration of one to five years, for non-EU foreign experts in the information technology sector (DE0003252F). The number of permits can be extended up to 30,000 in subsequent years, in the light of experience with the initial scheme. Employers will have to prove that they have not been able to employ a German expert before applying for a non-EU worker.

Outlook

In 2001, two major legal reforms are planned which will have a great impact on the development of German industrial relations. The first is the pensions reform, which has been heavily disputed between the government, trade unions and employers' associations (DE0008276F). Since this reform will improve the conditions for company pension schemes, the latter will become a major topic in the forthcoming bargaining rounds at sector and company level.

The second major legal project is the revision of the Works Constitution Act. Since employers and trade unions seem to have unbridgeable differences on the topic, this is likely to result in considerable political conflict, with the possibility of further far-reaching implications for the climate of German industrial relations.