1. 18-10-2011Hadeler© Gesamtmetall GESAMTMETALL Federation of employers’ associations of the German metal and electrical engineering industries Indra Hadeler Director International Relations Collective bargaining in the German M+E-Industries

2. 18-10-2011Hadeler© Gesamtmetall A.Key figures of Gesamtmetall B.The German Industrial Relations System C.Flexibilisation Options D.Future Challenges for our Industrial Relations Content 2

3. 18-10-2011Hadeler© Gesamtmetall  Companies:23.500  with employees: - up to 99 72 % - up to 1.000 26 % - more than 1.000 2 %  Employees:3.5 million  Payroll:147 billion euros  Turnover:770 billion euros  Exports:456 billion euros Key figures 2010 3

4. 18-10-2011Hadeler© Gesamtmetall A.Key figures of Gesamtmetall B.The German Industrial Relations System C.Flexibilisation Options D.Future Challenges for our Industrial Relations Content 4

5. 18-10-2011Hadeler© Gesamtmetall The German industrial relations system 5 … is rather complex due to different levels of bargaining

6. 18-10-2011Hadeler© Gesamtmetall CONSTITUTION LABOUR LAW UNION AGREEMENTS between Gesamtmetall and IG Metall - collective agreements - company agreements WORKS COUNCIL AGREEMENTS (NOT on money or working time!) Regulation of Working conditions 6 Employment Relationship INDIVIDUAL CONTRACTS 1 2 3 4 A lower hierachie regulation can never reduce rights of the employee !

7. 18-10-2011Hadeler© Gesamtmetall 1.German Constitution (Art. 9 III 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.“  So called tariff autonomy of the social partners! 2.Collective Agreement Act (TVG) „Parties of a collective agreement are trade unions, several employers as well as employers´ associations.“ (Article 2 I TVG)  Every company could conclude its own CA with a union! „Different agreements are only permitted if they are allowed by the collective agreement (so called opening clause) or if the modification is to the benefit of the employee.“ (§ 4 III TVG)  The employer may only improve the employment conditions fixed by the CA! Legal background – key regulation 7

8. 18-10-2011Hadeler© Gesamtmetall 3.Works Constitution Act (BetrVG) „Salaries and other conditions of employment which are regulated or customarily regulated by collective agreement MAY NOT be covered by a WORKS AGREEMENT (agreement with the works council). This shall not apply if a collective agreement expressly permits the conclusion of additional works agreements.“ (§ 77 III BetrVG)  NO works agreements about wages, working time, annual leave, christmas bonus etc. Legal background – key regulation 8

9. 18-10-2011Hadeler© Gesamtmetall 9 Right to Strike  Two basic principles for any industrial action: 1.Proportionality-principle 2.Ultima-ratio-principle  Any non-fixed strike requires a prior strike vote  75% support of union members  Thus so called „Warning Strikes“ are very popular  no legal definition  Political strikes are not allowed ! No legal framework  rules are determined by jurisprudence

10. 18-10-2011Hadeler© Gesamtmetall 10 Important rulings 2010: End of principle ”one company, one collective agreement”  No longer priority of CA which covers the highest number of labour relations in the company (related to trade union membership).  Negative impact on the guarantee of industrial peace during the runtime of collective agreements (e. g. Deutsche Bahn case).  Increasing number of small unions and increased competition between unions (pilots, doctors, train driver). 2007: Sympathy strikes are no longer illegal  but allowed unless they are obviously unsuitable, obviously not necessary or unreasonable.  Employers ask for legal framework on industrial action!

11. 18-10-2011Hadeler© Gesamtmetall 11 Employers´association Trade union CA Employer Employee Employment Contract Membership Directly binding The binding effect of the CA is linked to a “double-membership” Industrial relations system

12. 18-10-2011Hadeler© Gesamtmetall Direct Impact Binding character of the CA on the individual labour contract  If the employer has concluded the CA himself (company agreement) or is member in the negotiating employers´ association and  the employee is member of the negotiating trade union.  However, many of our companies apply our CAs also to non-organised employees in order to have the same conditions for the whole workforce. Indirect Impact Binding character of the CA on the individual labour contract  if the individual labour contract refers to a collective agreement Impact of Collective Agreements 12

13. 18-10-2011Hadeler© Gesamtmetall Collective AgreementCompany Agreement EmployerEmployee Labour Contract EmployerEmployee Labour Contract Obligation ++ Company "one fits for all""tailor-made solution" EmployerEmployee Labour Contract EmployerEmployee Labour Contract Collective Agreement vs. Company Agreement 13

14. 18-10-2011Hadeler© Gesamtmetall  Together we are strong!  Uniform sector standards by collective agreements  Obligation to keep industrial peace for the duration of the agreement  Planning reliability  Financial support in the case of collective action / strikes  Company isn’t burdened with negotiations on labour relations (expertise, costs, infrastructure…)  Many services including legal representation in labour court Advantages  Blanket solutions with (still) few possibilities to adapt to the individual company situation  Rather static solutions and negotiations mechanisms  Higher wages due to the influence of high performers Disadvantages Why to be a member of Gesamtmetall? 14

15. 18-10-2011Hadeler© Gesamtmetall 15 Collective bargaining round 1.Salary increase (increase of the wage table as a percentage)  permanent increase! 2.Single payment (lump-sum payment during the runtime of CA)  e. g. conjuncture bonus; this instrument can be used to damp down the increase of the wage table 3.Flexible elements to adapt the CA on company level (in the framework of the CA = opening clause) Today, our collective agreements usually contain 3 elements:

16. 18-10-2011Hadeler© Gesamtmetall 16 Collective bargaining round Foundation for the IG Metall claims (in %) NO CONCRETE CLAIM

17. 18-10-2011Hadeler© Gesamtmetall 17 Collective bargaining round Results before the crisis: around 3 % (in % for a 12 months runtime of the CA)

18. 18-10-2011Hadeler© Gesamtmetall 18 Collective bargaining round Runtime of our collective agreements in Monaten 1991 1992 1994 1995 1997 1999 2000 2002 2004 2006 2007 2009 2010 (in months) Average: 19,4 months

19. 18-10-2011Hadeler© Gesamtmetall A.Key figures of Gesamtmetall B.The German Industrial Relations System C.Flexibilisation Options D.Future Challenges for our Industrial Relations Content 19

20. 18-10-2011Hadeler© Gesamtmetall Increase flexibility for our companies We have to find more balance between the possibility to adapt agreements to company needs and reliable standards for the sector. Key Options:  Opening-clauses in collective agreements  Framework agreements to be filled on plant level Key factors:  Wages  Working time Flexibilisation Options 20

21. 18-10-2011Hadeler© Gesamtmetall Main objectives:  More flexibility for companies in all times of economic difficulties  Companies get a better financial scope to invest and innovate, in return they promise job-security or even job creation. Success: Over 700 agreements on company level Examples:  Extension of working time with or without wage compensation  Lowering / abolishment of bonus payments, postponement of wage increases, deferments of payments Example 1: Framework Agreement 2004 21

22. 18-10-2011Hadeler© Gesamtmetall 22 Example 1: Framework Agreement 2004 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

23. 18-10-2011Hadeler© Gesamtmetall 01.03.0601.06.06 3,0 % 31.03.07 20062007 Duration 13 months Postponement possible over the duration Increase to 620 € Without agreement: 310 € Reduction to 0 € Example 2: Wage-Agreement 2006 23 Opening-clause Overall burden (by option 310 €): 3.1% Overall burden (by option 620 €): 3.9% Overall burden (by option 0 €): 2.4%

24. 18-10-2011Hadeler© Gesamtmetall 23456789101112123456789101112123 20112012 2010 1. Step: 11 months 2. Step: 12 months Whole runtime: 23 months Overall burden for the whole time: 1.8% Overall burden (by forward option): 2.0% Overall burden (by backward option): 1.6% 160€ 2,7 % wage increase Example 3: „Crisis-Agreement“ 2010 24 Opening-clause Part 1: Wages

25. 18-10-2011Hadeler© Gesamtmetall Example 3: „Crisis-Agreement“ 2010 Part 2: Job Security Main objective: More flexibility for companies in the crisis against job-security Content: Possibility for companies to differ from the standards of our collective agreement in the following fields:  working time (reduction, free time compensation)  wages (proportional reduction against working time)  flexible distribution of working time (longer compensation periods)  Special rules for short-time-work  In case companies used these options, dismissals for operational reasons were not allowed! 25

26. 18-10-2011Hadeler© Gesamtmetall short time working allowance Salary and working hours normal case short time work (law) Example 3: „Crisis-Agreement“ 2010 Christmas bonus & holiday pay 0 % 100 % Reduced working hours state + employers allowance short time work (crisis agreement) net pay Reduced payment short time working allowance Christmas bonus & holiday pay payment Reduced working hours Part 3: Short-time-work 26

27. 18-10-2011Hadeler© Gesamtmetall 27 Short-time work - Payments Regular Wage Reduced wages Statutory payments 60 / 67 % of the difference Employer subsidy by CA* Regular working time Short-time work * Not in all Regions

28. 18-10-2011Hadeler© Gesamtmetall A.Key figures of Gesamtmetall B.The German Industrial Relations System C.Flexibilisation Options D.Future Challenges for our Industrial Relations Content 28

29. 18-10-2011Hadeler© Gesamtmetall Future challenges 1.Keep new form of relationship to IG Metall after the crisis  Next bargaining rounds without industrial action? 2.Increase flexibility of our collective agreements  More “Opening-Clauses” to differ from selected parts of our agreements, depending on the individual company situation.  More additional framework agreements allowing such deviations. 3.Flexible workforce  No limitations to use temporary agency work 4. Legal framework for industrial action? 29

30. 18-10-2011Hadeler© Gesamtmetall Muchas gracias! Thank you for your attention! 30