Inflation: More money for four million workers – Economy

As the chief negotiator IG Metal came to the Forum am Schlosspark on Thursday afternoon, he tried his hand at being a prophet: “Not only Kreuzberg nights are long, but also tariff nights,” said Roman Zitzelsberger before attempting to end the complicated nationwide collective bargaining round in the metal industry in his district of Baden-Württemberg . After several hours of negotiations in the baroque city of Ludwigsburg, there was actually a result.

In the largest German industry, employees will soon earn significantly more in a difficult inflationary period. Employers and unions agreed on a two-stage increase in wages by 5.2 percent from June 2023 and by 3.3 percent from May 2024 for the four million employees in car manufacturers, mechanical engineering and other companies. In addition, there is a lump sum of 3000 euros, paid out in two tranches in March 2023 and 2024. The federal government has to relieve the currently high inflation a payment of up to 3000 euros from employers to their employees is exempt from tax and social security contributions.

The industry is thus spared additional strikes that would have severely disrupted production in a crisis situation. After months of waiting, the employees, on the other hand, can be sure that they will get through the period of hard inflation better with significantly more income.

“Hard Wrestled and Negotiated”

IG Metall district leader Roman Zitzelberger said after the twelve-hour negotiations: “We fought and negotiated hard, but in the end there is an acceptable compromise on the table. The colleagues are finally getting the permanent percentage increase in pay that they are entitled to.” Südwestmetall negotiator Harald Marquardt spoke of a “painful compromise” from his point of view, which is only acceptable because the long term gives companies planning security. In addition, relief options for companies in need are included.

A collective bargaining agreement is always a compromise

Gesamtmetall boss Stefan Wolf had previously stated that a collective bargaining agreement was always a compromise. He would like an agreement: “Day strikes and labor disputes are of no use to anyone.” Everyone knows that in Germany there is a recession.

Previously, in October, there was a degree in the second largest industrial sector, chemistry. The trade union and the employer quickly came to an agreement without a public show fight. The companies pay their employees one-off payment of 3,000 euros and 6.5 percent more wages. The collective agreement runs for 20 months. According to the union, that means an average of 13 percent more money, so it compensates for a large part of the inflation.

In the metal industry, employers and trade unions have fought bitterly in recent months – and attacked each other verbally. They alternately accused each other of “horror scenarios”, “unreality” or “scandalous impertinence”.

IG Metall boss Hofmann already pointed out in June that inflation was hitting the Germans massively: “We need a strong wage increase. It cannot be that the employees have to pay for the inflation on their own,” he explained in the Interview with the SZ. A little later, the board of directors decided to demand an eight percent increase in wages – the highest demand in 15 years.

Employers insisted above all on flexibility

But while the rate of inflation slowly climbed to ten percent, the employers did not respond to the demand for a long time. They referred to the uncertain situation of the companies and the massive increase in energy prices since the Russian invasion of Ukraine. The employers insisted above all on flexibility. Companies that are doing badly should be allowed to deviate from the wage agreement. And an emergency clause is required, if anything gas fail to materialize and production is threatened.

Overall metal boss Stefan Wolf set a gloomy tone: “We are seeing the first bankruptcies and expect more”. The employer president heated up tempers for weeks: with his demand for longer working hours. And the position, under certain circumstances it even needs one wage freeze. And the request to the employees, given the expensive energy wear thick sweaters. At least that’s what he later tried to capture as “a bit flippant”: “We just have to save energy. Then I’ll put on two sweaters in the office too”.

Government submission

Bad mood spread between the social partners. The federal government had provided them with a template to turn into a wage agreement. Last but not least, at the request of the unions, the government released a special payment of 3,000 euros from taxes and social security contributions. A lot of net money goes to the employees. And the companies do not have to pay social security contributions.

“Extremely interesting” was what a business official said back in September with a smile. But when the employers finally submitted a first offer at the end of October, it consisted only of these 3,000 euros. And not from a permanent percentage wage increase, which IG Metall had made a condition for a collective bargaining agreement.

The union increased the pressure with warning strikes. According to IG Metall, almost 900,000 people throughout Germany were involved by Thursday. Despite this, there were no new offers from employers for a long time. Things have only started to move in the past few days.

As a result of the wage deal, the country’s largest industrial sector is now spared further long strikes, which have increased significantly in intensity. This calm is helping companies turn their high backlogs into production, which would have been delayed if there had been strikes. And the workers will soon get more money.

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