Berlin According to economists, the social partners have shown a sense of proportion with the wage agreements in the metal and chemical industries. At the moment there is no risk of wages and prices escalating.
The inflation-related loss of purchasing power among employees will be offset to a large extent by the higher standard wages and the one-off payments, said Torsten Schmidt, head of the economy at the RWI economic research institute, to the Handelsblatt. “However, the agreements are not likely to lead to higher real wages until the year after next, so a wage-price spiral is not to be expected as a result of the collective agreements reached so far.”
Due to the long term and the possibility of postponing collective bargaining components or leaving them out, the collective bargaining agreement creates stable framework conditions for companies, said the director of the German Economic Institute (IW), Michael Hüther, the Handelsblatt. “Nevertheless, there are mainly energy-intensive companies that will have difficulties with this.”
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In mid-October, the collective bargaining parties for the 580,000 employees in the chemical-pharmaceutical industry had already agreed on a collective agreement with a similar structure. Here, wages and salaries will rise in two stages by a total of 6.5 percent, and there will also be an inflation premium of 3,000 euros in two tranches. However, the term of 20 months is somewhat shorter than in the metal industry, which is 24 months.
One-time payments keep costs for companies in check
The option contained in the federal government’s third relief package to pay out special payments of up to 3,000 euros tax- and duty-free by the end of 2024 has taken considerable pressure off the collective bargaining conflicts. “The instrument is good for both sides,” said Stefan Wolf, President of the Gesamtmetall Employers’ Association. Without the option of a tax-free special payment, IG Metall would hardly have been satisfied with the percentage increase that has now been agreed, according to metal employers in Baden-Württemberg.
Thanks to the one-off payments, it was possible to keep the long-term increase in costs for companies in check – and with it the inflationary pressure. The President of the Ifo Institute, Clemens Fuest, told the Reuters news agency that in view of the high level of uncertainty about future economic developments, it makes sense to use one-off payments instead of relying solely on permanent wage increases.
8.5 percent plus a special payment is high, commented the chief economist at Berenberg-Bank, Holger Schmieding, on the metal tariff compromise. However, wage pressure will decrease over time, as the high increase of 5.2 percent in the coming year will be followed by a “more tolerable” increase of 3.3 percent in 2024. “Bump instead of spiral,” said Schmieding.
The German Council of Economic Experts expects an inflation rate of eight percent for the current year and 7.4 percent for 2023. So far, the development of negotiated wages has lagged behind the price increase. They increased by 3.4 percent in the first quarter due to high special and one-off payments. In the second quarter, momentum weakened again to 1.2 percent.
>> Read here: Head of economics expects persistently high inflation
With the metal and chemical industries, two of the really big collective bargaining rounds that could put downward pressure on wages have come to an end. Negotiations for around 2.5 million federal and local employees will begin on January 24th. Here, the unions Verdi as well as the DBB civil servants’ association and collective bargaining union have demanded 10.5 percent for twelve months, but at least 500 euros more per month. Due to the minimum amount, the demand even amounts to around 15 percent on average.
“The cost of living has increased dramatically.”
(Photo: dpa)
Nevertheless, DBB boss Ulrich Silberbach justifies the high number: “The cost of living has increased dramatically, and most of the employees work in the lower and middle service and are not paid like state secretaries,” he said in an interview with the Handelsblatt. It is also important to make up for the loss in real wages that employees have suffered since the last contract was concluded almost two years ago.
In a short time, politicians mobilized 500 billion euros for corona aid, the Bundeswehr, relief packages and gas price brakes, said Silberbach. There would be the 16 billion euros, to which the employers had put the collective bargaining demand of the unions, “not the downfall of the West”.
>> Read here: Interview with head of the civil service association Silberbach: “The cost of living has risen dramatically”
Silberbach also justified the tariff demand with the increase in the standard rates in the state basic security planned in the course of the citizens’ allowance. Some of the employees of the Federal Police are still grouped in salary groups A6 or A7, which means a basic salary of 2,500 or 2,600 euros gross per month. “They’re already putting on the slide rule and seeing how they compare to basic security,” said Silberbach. “The state cannot afford to treat its employees only slightly better than those receiving basic social security.”
More: Why the citizen income reform could lead to higher salaries for civil servants