Collective agreements in the German M+E-Industry

1. Collective agreements in the German M+E-Industry Nicola Ehricke GESAMTMETALL the employers’ association of the German metal and electrical industry Berlin

2. A. Collective agreement B. Options of flexibilisation C. Future of the collective agreement Outline

3. A. Collective agreement

4. The German Tariff Autonomy of the Social Partners • Protected by our Constitution (Article 9 section 3 GG) „The right to form associations to safeguard and improve working and economic conditions shall be guaranteed to every individual and to every occupation or profession.“ • Collective bargaining rights for employers, employers • associations and trade unions (Article 2 section 1 TVG) „Parties of a collective agreement are trade unions, several employers as well as employers associations .“

5. Collective agreement vs. company agreement Gesamtmetall Company + + IG Metal IG Metal Collective Agreement Company Agreement Obligation Obligation Employer Employee Employer Employee Labour Contract Labour Contract

6. Direct Impact Binding character of the CA on the individual labour contract If the employer has concluded the collective agreement himself (company agreement) or is member in the negotiating employers´ association and the employee is member of the negotiating trade union. Indirect Impact Binding characterof the CA on the individual labour contract if the individual labour contract refers to a collective agreement Impact of Collective Agreements

7. B. Options of flexibilisation

8. Strenghts and weaknesses of the CA Strenghts of CA Weaknesses of CA • Uniform sector standards • Obligation to keep industrial peace for the duration of the CA • Planning reliability • Financial support in the case of collective action/ strikes • Company isn’t burdened with negotiations on labour relations (expertise, costs, infrastructure etc.) • Only blanket solution without depending on the individual company situation • No flexibel, rather static solutions and negotiations mechanisms • Expensive agreements

9. Flexible elements of the CA M+E - Collective agreement (regulation of working conditions) Wages Working time CA „Location security“ CA „Job security“ CA „Flexible retirement“ • Differentiation • Supplementary collective agree- • ment • Open-clause • Modification

10. Example: CA „Wages 2009” 3 Flexible Elements for more Liquidity and less Costs Overall burden for 2009: maximal 2,9%, at least 1,4% Lump-sum payment No. 2: Postponement or Reduction Postponement of wage increase until December 2009 Lump-sum payment No.1: postponement until Jan. 2009 Are not payed out for financing the CA „Flexible Retirement“ 122 € 0,4 0,4 0,4 0,4 510 € 2,1% 2,1% 2008 2009 2010 12 11 12 1 2 3 4 5 6 7 8 9 10 11 1 2 3 4

11. Example: CA „Wages 2007” 2007 2008 Bonus: 0,7% Suspension 1,7% 400 € 4,1 % June Oct Dec June April Nov May Duration: 19 months 10 months 2008: 2,1%, Reduction to least 1,1 % 2007: 3,9 % Overall burden for the duration: 3,3 %

12. Example: CA „Wages 2006” 2006 2007 Increase to 620 € Without agreement: 310 € Reduction to 0 € Postponement possible over the duration 3,0 % 01.03.06 01.06.06 31.03.07 Duration 13 months

13. Example: CA „Job security“ • Agreement: • The agreement provides the possibility to differ from the standards of CA in • - working time (reduction, free time compensation) • wages (proportional reduction against working time) • flexible distribution of working time (longer compensation periods) • Dismissals for operational reasons are excluded. • Main objective: • Open-clause for overcoming a crisis connected with job • security promise.

14. Example: CA „Location security“ • Agreement: The agreement provides the possibility to differ from the standards of the CA, and aims to strengthen companies´ ability to compete, to invest, and to innovate and thus securing employment and creating new jobs. • Main objective: Give-and-take (self-commitment) for location security. • Success: Already over 700 agreements are used by companies. • Examples: • Extension of working time with or without wage compensation • Lowering / abolishment of bonus payments, postponement of wage increases, deferments of payments

15. Example: Extension of working-time Longer working-time is often the choice • Extension of working time without wage compensation 394 • Extension of working time with wage compensation • 30 • Extension of working time with part wage compensation 12

16. Pillar 2 Individual Pillar 1 Collective • Module 4 – Entitlements • Special entitlement (up to a • maximum of 2.5% of the workforce) • General entitlement (up to a • maximum of 2.5% of the workforce) • Ceiling: maximum of 4% Module 1 – Safeguard Existing works council agreements under the Collective Agreement on Partial Retirement (TV-ATZ) remain valid Module 2 – Option Voluntary works council agreement on the Flexible Transition into Retirement 2010 Module 5 – Individual agreements Voluntary individual agreements Module 3 – Replacement Voluntary works council agreement for other purposes Example: CA „Flexible retirement“ The structure of the new Flexible Transition into Retirement

17. B. Future of the collective agreement

18. The future of the collective agreement • Challenges • New Balance between more flexibility and adaptability on company level and reliable standards on regional / branch level • Keep companies “on board” = prevent further decline of full membership by making the regional CA more attractive • Solution • More so called “Open-Clauses” to differ from selected parts of the CA depending on the individual company situation. • Difficulty: • IG Metall accepts more flexible agreements on company • level but refuses same flexibility in a sector agreement • ( visibility of agreements, recruitment of new members)