Dusseldorf Ironically, Nestlé and Unilever: The largest and fourth-largest consumer goods group in the world have so far refused their employees an inflation premium – despite good business. “The workforce is disappointed and pissed off,” said Andreas Zorn, head of the general works council at Nestlé Germany, the Handelsblatt.
Nestlé (Maggi, Kitkat, Nescafé) employs around 8,500 people in Germany, Unilever (Knorr, Pfanni, Langnese) around 2,700 people. Unilever Group works council boss Hermann Soggeberg said: “The management boasts internally about how great it was to raise prices.” At the same time, the employees would complain about the high costs, “but the management remains stubborn”.
In fact, Unilever increased prices globally by 11.3 percent last year, the British group announced on Thursday. Sales rose to the equivalent of 67.8 billion euros. Nestlé raised prices by 7.5 percent in the first nine months of last year. The Swiss group will present annual figures in mid-February, analysts expect sales to increase to around 96 billion euros.
The two consumer goods groups are therefore partly responsible for the fact that food prices rose by 13.4 percent in the past year, according to the Federal Statistical Office. This also caused real wages to fall by 4.1 percent. The lower-earning employees of the two groups are particularly suffering from this.
That’s why Unilever employees stopped work for half a day on Thursday as part of works meetings. On Tuesday and Wednesday there were protest actions in the Nestlé chocolate factory in Hamburg. At the end of November, around 3,500 Nestlé employees had submitted their signatures to the head of Germany, Marc Boersch, demanding an inflation premium – without success.
>> Also read: German Inflation rises again in January – by 8.7 percent compared to the same month last year
The federal government enables companies to pay employees a one-time bonus of up to 3,000 euros free of taxes and duties. This should enable citizens to better shoulder the rapidly increasing costs for energy and food.
Dispute between management and employees
At Nestlé and Unilever, the fronts between employees and management have hardened. The corporations may be reluctant to pay out the premium because they are suffering from high raw material or energy costs. Unilever expects material costs to increase by 1.5 billion euros in the first half of 2023.
At Nestlé, the margin fell by three points to 14.7 percent from the end of 2020 to mid-2022 due to the increase in costs. Despite the price increases, more than 2.5 billion francs could not be realized, Nestlé CEO Mark Schneider complained in an interview with the “Frankfurter Allgemeine Sonntagszeitung”.
The head of the works council, Zorn, says that Nestlé is artificially calculating: “The first year of the corona virus was an absolute boom year for the food industry and for Nestlé.”
The group was able to increase sales and profits.
(Photo: obs)
Nestlé CEO Schneider explained that the additional costs incurred have not yet been passed on in full, and that there will be further price increases.
Zorn confirms that Nestlé in Germany only passed on the costs to retailers after a delay. But: “Last year there were already three price increases in Germany, and another is currently being negotiated.”
Competitors from Nestlé and Unilever have already paid inflation premiums
Other consumer goods companies have already made one-off payments. Persil producer Henkel and Nivea manufacturer Beiersdorf are obliged to pay 3,000 euros because of the collective agreement in the pharmaceutical and chemical industry. The first of two tranches of EUR 1,500 was transferred in January.
At Unilever, at least a fifth of the local workforce has benefited from this. The group produces body care products such as Dove soap at its plants in Buxtehude and Mannheim. Most employees at Nestlé and Unilever are covered by food industry collective bargaining agreements. These were last negotiated in 2021. The extreme development of inflation was not foreseeable at the time.
The new negotiations are scheduled for spring and summer, at the Unilever site in Heilbronn only next year. Both companies refer to these on request. For example, Nestlé wants to “use the instrument of the inflation compensation premium responsibly in the context of the forthcoming collective bargaining”.
For Zorn, the Nestlé works council, it comes too late: “People need the help now, when the need is greatest, and not in many months.” From the point of view of the employee representatives, there is enough money for a quick payment.
>> Read more: How billion-dollar corporations struggle with small start-ups
Unilever works council Soggeberg says: “The group is not under so much pressure that it cannot help the employees.” In fact, despite the adverse circumstances, the group was even able to increase its profit slightly to 10.9 billion euros. At 16.1 percent, the operating margin was the lowest it had been in seven years.
Opportunities for works councils limited
The employees would like more appreciation, says Soggeberg, the frustration is great even in the lower management levels. Apparently, Unilever is now giving in. On request, the group announced that students and trainees “with the next salary” would receive a one-time payment of 500 euros.
The group has already paid single premiums in other regions: 750 pounds in England, 750 euros in the Nordic countries and between 300 and 500 euros in Eastern European countries. It remains questionable whether this will happen quickly in Germany.
Because of the current collective agreements, the employees have a peace obligation and are not allowed to go on strike. Their only option is to shut down production in phases through works meetings.
Soggeberg says: “While the company can go to the dealer several times a year, our only option is to act as a petitioner.” The fact that the company does not want to pay is purely a tactic in the run-up to the collective bargaining.
More: Dove soap instead of milk: Hein Schumacher becomes the new head of the consumer goods group