Berlin The IG Metall is expected to with the demand for seven to eight percent more money will go into the forthcoming collective bargaining round for the almost 3.9 million employees in the metal and electrical industry. The union executive made the recommendation on Monday. After further discussions in the regional collective bargaining committees, the final number is to be decided on July 11th. Most recently, the union had demanded a similar amount with 8.0 percent in 2008.
“The companies are doing well,” said IG Metall boss Jörg Hofmann in Frankfurt. “But the employees are not doing well when they look at supermarket and energy bills.” Concerns that their demand could set the union in motion a dreaded wage-price spiral, he rejected.
Rather, the union contributes to strengthening private consumption, which is currently the only recognizable source of economic growth. Hofmann admitted, however, that there had been a controversial discussion on the IG Metall board of directors about the amount of the claim. That is why one wants to give the regional wage commissions even more space for the debate as to which demand is ultimately “enforceable”.
A high level of expectation pressure has built up among employees in the metal and electrical industry. The last regular increase in the table with a permanent percentage increase in wages was agreed between the employer and the union at the end of 2018.
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After that, under the impression of the corona pandemic in 2020 and 2021, they had agreed on two crisis collective agreements. The first provided for a zero round, the second one-off payments and recurring special payments.
The metal and electrical industry is not the first sector in which negotiations are taking place under the impression of sharply increased consumer prices:
In the run-up to the recommendation, IG Metall boss Hofmann had repeatedly made it clear that the effects of high inflation on employees could not be combated solely with the means of collective bargaining. His union is therefore demanding that the federal government not only cap gas prices but also reduce electricity prices and provide additional relief for consumers in the coming year – financed by new debts and skimming off energy company profits from the crisis.
Union is based, among other things, on target inflation
Hofmann argues that if IG Metall had wanted to absorb the inflation trend through collective bargaining, it would have had to make a two-stage demand. For example, in its forecast published in April, the federal government is assuming a price increase of 6.1 percent for the current year and 2.8 percent for 2023.
Normally, the union bases its demand for one year on the target inflation rate of the European Central Bank (ECB) of two percent and the trend productivity, i.e. the productivity of the companies in the recent past, which is around 1.1 percent. Then there is what is known as a redistribution component.
Hofmann explains that the IG Metall board of directors is now coming out with a corridor of seven to eight percent by saying that the union and employers agreed in the last crisis wage agreement in March 2021 to look at the next round to see whether wage policy for 2022 would be adjusted got to. From the union’s point of view, the negotiations are also being conducted retrospectively, as the applicable wage agreements do not expire until the end of September.
The collective bargaining parties have quite different views of the current situation and the future prospects of the metal and electrical industry. The employers’ association Gesamtmetall published the results of a company survey at the weekend. According to this, 94 percent of the companies are confronted with sometimes massive cost increases, one fifth even consider their own existence to be endangered in view of the current economic developments. Only one percent of all companies in the industry see themselves in a position to fully pass on the cost increases through price increases to their customers.
Accordingly, Gesamtmetall President Stefan Wolf accused the union on Monday of whitewashing the situation in the industry. Around 26,000 companies belonged to the metal and electrical industry. Orienting oneself to maybe a hundred companies that are doing particularly well does not do justice to the complicated situation, said Wolf.
The union draws a completely different picture and refers to a survey of works councils from around 2,400 companies in the industry. According to this, almost 84 percent of those surveyed rate the current order situation as good or rather good. 70 percent stated that their company can at least partially pass on increased energy or raw material prices to customers. Seven out of ten works council members are optimistic about the earnings expected for the coming year.
It is undisputed that the range of orders has reached a new high. In the second quarter, companies in the metal and electrical industry were working at full capacity for six months. However, it is unclear to what extent sustained disruptions in supply chains or further increases in energy and raw material prices will affect the industry – not to mention an escalation of the Ukraine war and a possible gas embargo. It is also uncertain how long the currently very high inflation rates will last. In the euro area, inflation is currently at 8.1 percent.
In September, when the regional negotiations begin, the situation will be looked at again, says Hofmann. The peace obligation ends on October 28, after which strikes are possible. However, a new crisis wage settlement, as agreed by the collective bargaining partners in the chemical industry in April, is probably out of the question. According to Hofmann, IG BCE and BAVC had only caught up on what IG Metall had already done with its two Corona degrees.
More on this: Interview with IG Metall boss Jörg Hofmann: “An immediate embargo on gas, hard coal and oil would be counterproductive”