The question was crucial for the development of inflation, often feared across the Rhine. Wage pressure in German industry, a key branch of the country’s economy, will ultimately remain moderate. This is the result of an agreement reached on Tuesday March 30 between the IG Metall union and the employers’ organization Gesamtmetall for the North Rhine-Westphalia (west) region, which should serve as a pilot for talks in d ‘other regions. The agreement provides for a gradual wage increase of 2.3%, along with guarantees for employers in difficulty. Above all, it sealed social peace for almost two years.
The outcome of the negotiations was eagerly awaited. The euro zone’s largest economy is certainly going through one of the biggest economic crises in its history, but its metallurgical and electronics industry, which includes the central automotive sector, has generally held up well. Thanks to the strength of exports, particularly to Asia, the branch posted a strong rebound from mid-2020 and is continuing its momentum. Few sectors can claim to have already caught up to their pre-crisis level, despite the losses recorded in spring 2020.
The IG Metall union therefore did not intend to let employers take full advantage of this situation. Since December, he has been asking for a 4% increase, to be renegotiated in twelve months. The bosses had closed the door to any increase, citing the persistence of uncertainties linked to the Covid-19 pandemic and to supplies, as well as the risk of bankruptcy in certain companies. Some small, very specialized automotive subcontractors are suffering the full brunt of two major shocks: the crisis linked to the new coronavirus and the decline of the internal combustion engine, including diesel. According to employers, a third of companies in the sector could be affected. These concomitant factors, with contrasting effects, made the negotiations very complex.
“A sign of confidence in companies”
After a series of warning strikes in recent weeks, a compromise has been found. The union obtained a bonus of 500 euros for each employee and a gradual increase in wages of 2.3% over twenty-one months, but in two installments. The counterparties include important flexibility measures on payments and working time, depending on the state of the order book. Thus, salary increases can be transformed into free time for the employee, without losing his job. These changes should allow companies in crisis to modernize, while not jeopardizing employment.
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