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One-off payment fizzled out? The delicate signal of the best degree in 30 years

The IGBCE trade union negotiated a "sustainably effective relief package" on Tuesday for around 580,000 employees in the chemical and pharmaceutical industries.

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One-off payment fizzled out? The delicate signal of the best degree in 30 years

The IGBCE trade union negotiated a "sustainably effective relief package" on Tuesday for around 580,000 employees in the chemical and pharmaceutical industries. The agreement with the employers has two pillars: The tax-free one-off payments of up to 3,000 euros advertised by Chancellor Olaf Scholz (SPD) are fully exhausted. This "inflation money" will be paid out in January 2023 and January 2024 at the latest, there are 1500 euros each.

Also effective in January 2023 and 2024 are salary increases of 3.25 percent each – a total of 6.5 percent. The latter also apply to trainees, who each receive an additional special payment of 500 euros in two tranches. According to the IGBCE, both together produce a net relief of 12.94 percent on average; in the entry-level salary group it is 15.64 percent. The negotiations were interrupted in the spring. At that time, a seven-month "bridging solution" was agreed, which provided for one-off payments of up to 1,400 euros.

The current degree is remarkably high. "People benefit from the federal government's attractive 'gross-for-net' offer as well as from the highest tariff increase in the chemical industry for more than 30 years," says IGBCE Chair Ralf Sikorski. His colleague on the Management Board, Michael Vassiliadis, adds: “This deal has a signal effect beyond the industry. After all, it proves that well-done tariff policy can be a central component of a bulwark against inflation and energy wars for society as a whole.”

"It remains to be seen whether this degree actually sends a signal to the other sectors," says Hagen Lesch, labor market expert at the employer-related Institute of the German Economy (IW) to WELT. “I doubt that Ver.di and IG Metall will orientate themselves exactly on this. The last time that a collective bargaining agreement by the IGBCE had a dampening signal effect on other sectors was in 2000 – i.e. more than 20 years ago.”

Negotiations will not only take place in the metal industry, with its almost two million employees, but also, from the spring, in the union of federal and local civil servants, where around 2.5 million employees work. And where collective bargaining rounds are still in progress, the signs are currently pointing more to confrontation than to agreement.

The tax-free one-off payment of up to 3000 euros should actually prevent that. "It could be the joker to at least dampen a wage-price spiral," said Lesch last month. This approach has already proven itself during the pandemic.

The request for a one-off payment is also the main result of the concerted action so far. The dialogue forum of employers, trade unions and politicians, which started in early summer, has so far produced surprisingly few concrete results.

To date, there have been no binding resolutions. "You shouldn't expect too much from the concerted action," commented Clemens Fuest, head of the ifo Institute for Economic Research, of the last meeting in mid-September.

"I'm sure that the employees will be happy if they receive a tax- and duty-free payment in addition to the agreed salary," Scholz said at the time. Employer President Dulger welcomes the one-time payment. However, not all companies could make these payments: "Many companies are currently on the brink of economic collapse. Some companies will not be able to do this on the first day and not in full.” The payment must therefore be “voluntary and flexible”.

For the unions, on the other hand, it is clear: They see the one-off payment as part of collective bargaining. However, a table increase does not replace this.

"The decisive factor is that the Chancellor's proposal has now been taken up," says Lesch on the IGBCE agreement. “Because this way there is no major conflict between monetary and wage policy. The one-off payment is, as the name suggests, a one-off burden for companies and it does not fuel the wage-price spiral.”

Among other things, the DGB boss Yasmin Fahimi had made it clear that she considers the wage-price spiral to be a danger that was talked about. In general, trade unionists are skeptical about one-off payments. These would not prevent a permanent loss of real wages due to inflation.

Ver.di made an unusually high demand last week for the public sector. Union boss Frank Werneke demands 10.5 percent more. "The trade unions step in the Chancellor's knee," commented Hagen Lesch. His idea of ​​tax-free one-off payments was intended to prevent high wage demands. These threatened to fuel inflation further.

"If the trade unions do not accept a minimum of economic reason in the negotiations, the wage-price spiral will quickly begin to turn," criticizes Lesch.

If a deal of 10.5 percent were to be achieved, the bottom line would be additional costs of around 15.4 billion euros, as the Association of Municipal Employers' Associations (VKA) has calculated.

The implementation of the demands is "simply not affordable in this form", says VKA President Karin Welge. IW economist Lesch takes a similar view: “The demands are beyond measure. The trade unions ignore the fact that the energy price explosion is leading to a loss of prosperity, which the public sector also has to bear.”

In addition, real wages have already risen significantly in recent years. Lesch does the math: Between 2012 and 2021, collective wages and civil servant salaries in the public sector rose by an average of a good 2.5 percent each year. The inflation rate increased by almost 1.4 percent per year in the same period. This results in an annual real wage gain of a good 1.1 percent.

“According to estimates by the Institute for the World Economy in Kiel, Germany will have to spend 123 billion euros more on its energy imports this year alone, and as much as 136 billion next year,” says Lesch. This results in a loss of prosperity - not only for employees and companies, but also for employees in the public sector.

"Apparently, however, the unions believe that the risk of losing one's job is manageable in the public sector," says Lesch. "What they ignore, however, is that the resulting debts limit future wage negotiations as well as future hiring potential."

The tone is also getting rougher with the metalheads. "Employers are provoking warning strikes," says IG Metall. They also did not submit an offer in the second round last week. There are "no signs of a rapprochement", according to the employee representatives.

The peace obligation ends on October 28. "Then IG Metall can also call for warning strikes in order to put economic pressure on employers," the trade unionists make clear.

The metal employers, on the other hand, see little scope for table increases. The production level is still twelve percent below the level before the corona crisis and rising energy prices as well as increasing shortages of raw materials and primary materials are increasingly driving companies into a corner, according to Niedersachsenmetall, for example.

“Our companies are currently struggling with an accumulation of crises. A wage increase of eight percent would overwhelm many companies financially,” says Torsten Muscharski, chief negotiator for the employers. And the good order situation is put into perspective by supply chain problems, the shortage of workers, high energy prices and the economic situation.

Contrary to claims by unions, the cost increases cannot simply be passed on, says Peer-Michael Dick, Managing Director of the Südwestmetall employers' association: "The massive upheavals on the energy markets are making all previous calculations obsolete and are increasingly devaluing the supposedly high order backlog."

A current survey by the association shows: Only one percent of companies can pass on price increases in full; a further eleven percent to a “cost-covering extent”. Nine percent of the companies cannot pass on the cost increases at all and another 62 percent to an extent that does not cover their costs.

IG Metall, on the other hand, argues that many companies wrote record numbers in 2021. "And in the third quarter of 2022, not only one or the other company will report best-ever results. I'm sure of that," said union boss Jörg Hofmann in an interview with WELT AM SONNTAG at the end of September.

Employers are clearly more pessimistic. According to a survey by Niedersachsenmetall, orders have fallen significantly in more than 60 percent of the companies in recent weeks.

Negotiations will continue in parts of the healthcare system, for example for the employees of the University Hospital in Frankfurt. There have been repeated strikes in the past week. The DGB boss Yasmin Fahimi described the conditions at the university hospitals during an on-site visit that WELT accompanied in September as an "absolute work drama in which many people break".

In the transport sector, too, there are signs of industrial action. After the recent strikes at the airline Eurowings, the Union of German Train Drivers (GDL) also called for strikes in southern Germany at the end of last week. Numerous obstacles in rail traffic were the result - the employers would have "provoked" it, according to the GDL.

There is no "negotiable offer", says union boss Claus Weselsky. "Anyone who thinks they can behave in such a detached, self-important way and ignore the needs of the workforce is either very daring or just plain stupid," he says.

For train drivers, the one-time payment is also part of the negotiations. For Weselsky, however, the instrument only seems to be of secondary importance: "More than ever, the members are willing to fight for a collective agreement to expand pay, allowances and working time regulations as well as a one-off payment of 3000 euros for all GDL members in both companies."

"Everything on shares" is the daily stock exchange shot from the WELT business editorial team. Every morning from 7 a.m. with our financial journalists. For stock market experts and beginners. Subscribe to the podcast on Spotify, Apple Podcast, Amazon Music and Deezer. Or directly via RSS feed.

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