Interim report on 2004 collective bargaining round

Dribbusch, Heiner

Overview

Article

Interim report on 2004 collective bargaining round

Published: 24 August 2004

In July 2004, the Collective Agreement Archive (Tarifarchiv) of the Institute for Economic and Social Research (Wirtschafts- und Sozialwissenschaftliches Institut, WSI) within the Hans Böckler Foundation (Hans-Böckler Stiftung) published its interim report [1] on the 2004 collective bargaining round. The study evaluates all collective agreements concluded by trade unions affiliated to the Confederation of German Trade Unions (Deutscher Gewerkschaftsbund, DGB) in the first half of 2004. These new collective agreements cover 5.6 million employees, ie 27% of all employees covered by collective agreements.[1] http://www.boeckler.de/pdf/p_ta_hjb_2004.pdf

In July 2004, the Institute of Economic and Social Research (WSI) presented its interim report on Germany's 2004 collective bargaining round. The study evaluates collective agreements concluded in the first half of 2004, affecting about 27% of all employees covered by collective agreements. Calculated on an annual basis, the average increase in wages and salaries will be around 2.0% in 2004, which is below the average pay increase in 2003 (2.5%).

In July 2004, the Collective Agreement Archive (Tarifarchiv) of the Institute for Economic and Social Research (Wirtschafts- und Sozialwissenschaftliches Institut, WSI) within the Hans Böckler Foundation (Hans-Böckler Stiftung) published its interim report on the 2004 collective bargaining round. The study evaluates all collective agreements concluded by trade unions affiliated to the Confederation of German Trade Unions (Deutscher Gewerkschaftsbund, DGB) in the first half of 2004. These new collective agreements cover 5.6 million employees, ie 27% of all employees covered by collective agreements.

Calculated on an annual basis, the average pay increase for 2004 will be around 2.0%, which is below the average increase of 2.5% in 2003 (DE0402207F) (this calculation includes all pay increases coming into effect in 2004, including those collectively agreed in previous years). The average increase in eastern German pay levels will be 2.6%, which is significantly higher than the average increase of 1.9% in western Germany - see table 1 below. The reason for this is comparatively high pay increases in the eastern German raw materials and production industries and in parts of the eastern public services and social security sector. Average collectively agreed pay in eastern Germany will amount to around 93.9% of average western German pay levels in 2004, which is 0.5 percentage points above the level reached at the end of 2003.

Table 1. Annual increases in collectively agreed pay (in %), by sector, 2004*
Sector	Western Germany	Eastern Germany	Germany
Banking, insurance	1.8	1.8	1.8
Commerce	1.8	1.7	1.8
Construction	2.1	2.2	2.1
Consumption goods industry	2.0	2.4	2.1
Energy, water, mining	1.3	2.7	1.8
Food industry	2.0	2.3	2.0
Horticulture, agriculture, forestry	2.0	2.5	2.1
Investment goods industry	2.3	2.2	2.3
Private services, non-profit associations	1.7	4.3	2.0
Public services, social security	1.4	3.0	1.8
Raw materials and production industries	2.0	3.3	2.1
Transport and communication	2.0	2.9	2.2
All sectors	1.9	2.6	2.0

* Figures are calculated on the basis of all pay increases coming into effect in 2004, collectively agreed either in the first half of 2004 or in previous years.

Source: WSI Collective Agreement Archive 2004 (as at 20 June 2004).

Main settlements

The first major settlement in the 2004 bargaining round was concluded in February 2004 in the metalworking industry in the Baden-Württemberg region, between the German Metalworkers' Union (Industriegewerkschaft Metall, IG Metall) and the Employers' Association for the Metal and Electrical Industry in Baden-Württemberg (Verband der Metall- und Elektroindustrie Baden-Württemberg, Südwestmetall) (DE0403203F). This agreement provided for a pay increase of 2.2% in 2004 and a further increase of 2.7% in 2005. The most controversial issue in the bargaining round in metalworking, however, was the employers' demand to allow for extended deviations from the standard 35-hour week at company level without pay compensation and without having to obtain the final consent of IG Metall in order to allow such deviations. This triggered a wave of warning strikes involving some 500,000 employees across the metalworking industry. The conflict was finally settled and, as part of the compromise, it was agreed that under certain conditions up to 50% of employees in a company could work up to 40 hours a week (with full pay compensation for the additional hours).

The bargaining round for newspaper editorial staff was also a source of considerable conflict. On 25 February, following four weeks of strike action, the German Federation of Journalists (Deutscher Journalisten-Verband, DJV), the German Union of Journalists (Deutsche Journalistinnen und Journalisten Union, dju) within the United Services Union (Vereinte Dienstleistungsgewerkschaft, ver.di) and the Federation of German Newspaper Publishers (Bundesverband Deutscher Zeitungsverleger, BDZV) signed new collective agreements covering some 14,000 editorial staff working on daily newspapers (DE0403201N). Apart from a 1.3% pay increase coming into effect on 1 June 2004, the settlement included a provision that the amount of paid annual leave will be cut and the annual holiday bonus will be reduced from 100% of a month's pay to 80%.

On 14 May, after only two rounds of talks, the Mining, Chemicals and Energy Industrial Union (Industriegewerkschaft Bergbau, Chemie, Energie, IG BCE) and the German Federation of Chemicals Employers' Associations (Bundesarbeitgeberverband Chemie, BAVC) signed a package of new collective agreements for the 580,000 or so employees in the chemicals industry (DE0406205F). The package includes a new pay agreement, a new agreement on increasing the number of apprenticeship places and a joint declaration on the utilisation of flexibility clauses.

A notable agreement at company level on reducing weekly working time in exchange for job guarantees by the company was concluded in March between ver.di and the telecommunications company Deutsche Telekom AG (DE0405205F). Weekly working time will be cut from 38 to 34 hours with only partial wage compensation for employees. The company has agreed that employment will remain stable over 2004-5 and that there will be no redundancies for economic reasons before 31 December 2008.

Further collective agreements concluded in the first half of 2004 included those in sectors such as banking and the wood and plastics processing industries - see table 2 below.

**Table 2. Selected pay agreements concluded up to July 2004**
Date of agreement (2004)	Sector (region)	Main provisions
12 February	Metalworking industry (Baden Württemberg) (pilot agreement)	1.5% pay increase from March 2004 (following 2 'zero months') plus a flat-rate payment worth 0.7%; 2% increase from March 2005 plus a flat-rate payment worth 0.7%.
12 March	Wood and plastics processing industry (Baden Württemberg)	1.5% from March 2004.
15 March	Deutsche Telekom AG	Reduction of weekly working time from 38.5 to 34 hours (paid as for a 35.5-hour week); 2.7% pay increase from January 2005.
23 March	Automobile crafts (Thuringia)	1.4% pay increase from April 2004; 1.5% from December 2004.
14 May	Chemicals industry (western Germany)	One 'zero month' without increase followed by 1.5% pay rise from June, July or August 2004 (varying between bargaining regions); flat-rate payment worth 7.2% of monthly wage (prior to agreed increase).
2 June	Deutsche Post AG	Flat-rate payment worth EUR 130 for the period from May to October 2004; pay rise of 2.7% from November 2004; 2.3% from November 2005.
2 June	Chemicals industry (eastern Germany)	Partly as in western Germany plus 1.7% pay rise from September 2004 and 2.5% from October 2005 to adjust eastern wages to those paid in western Germany.
8 July	Banking	3 'zero months' with no pay increase followed by 2.0% from September 2004; 1.5% from September 2005.

Source: WSI Collective Agreement Archive, July 2004.

Gender pay gap

Although a considerable gap in earnings between men and women continues to exist in Germany (DE0404205F), special provisions to tackle wage discrimination and to promote equal opportunities were not included in those collective agreements concluded in the first half of 2004.

Commentary

The 2004 bargaining round confronted trade unions with demands from employers to renegotiate a number of collectively agreed standards - in particular those concerning working time and bonus payments. Another issue employers raised was the demand to extend flexibility and to allow the parties at company level to deviate from sectoral collective agreements. Trade unions only partly managed to resist these demands and to maintain previously achieved standards, and in a number of cases saw themselves forced to concede 'opening clauses'- or as in the case of newspaper editorial staff even cuts in collectively agreed standards.

The sector which drew the greatest public attention in the first half of the 2004 bargaining round was the metalworking industry. These negotiations highlighted in particular the issues of working time extension and opening clauses to allow deviations from existing collective agreements. Soon after the agreement was concluded, employers announced their intention to make use of the opening clause that allows the extension of working time for certain groups of employees under specific conditions. Conflicts at Siemens (DE0407106F) and Daimler Chrysler (DE0408102N), however, have shown that where there is an opportunity employers try to win concessions at company level which go far beyond the simple implementation of the working time opening clause. If more employers are successful in winning such far-reaching concessions, this would pose a serious threat to the binding character of sectoral collective agreements. (Heiner Dribbusch, Institute for Economic and Social Research, WSI)

Eurofound recommends citing this publication in the following way.

Eurofound (2004), Interim report on 2004 collective bargaining round, article.