In Germany, the dreaded big strike will finally not take place. Friday morning, November 18, the IG Metall union and the employers announced that they had reached an agreement on a wage increase, after twelve hours of debate and five rounds of negotiations.
Valid only for Baden-Württemberg, this “pilot” agreement should be adopted by the other regions in the coming days. IG Metall demanded 8% renegotiable increase in one year, due to record inflation, for the 3.9 million employees of the metal and electronics industry, central in Germany.
The agreement provides for a salary increase of 5.2% in June 2023, followed by another, of 3.3%, from May 2024, or 8.5% over two years. Added to this is a bonus also payable in two instalments, for a total amount of 3,000 euros. The agreement is valid for two years. These bonuses will be tax-exempt, thanks to a measure adopted by the government in the latest tax relief package, which allows companies to make exceptional payments to their employees, up to 3,000 euros, exempt from taxes and contributions. social. The device, advantageous for both employers and unions, has considerably reduced the pressure on the negotiators.
Powerful stabilization factor
Berlin feared that a sharp rise in wages in industry would reinforce inflation and business bankruptcies, or else trigger a dangerous price-wage spiral that spreads throughout the economy. Step-by-step wage increases and bonuses were methods favored by economists to avoid such effects, already used in negotiations in the chemical industry. The risk of a spiral now seems largely defused. A sign of the political importance of the subject, the Chancellor, Olaf Scholz, spoke about the outcome of the negotiations, welcoming the results. An exception to the principle of the autonomy of the social partners, sacrosanct across the Rhine.
IG Metall welcomed the compromise. A technician employee should obtain, thanks to the increases and the single payments, an additional 7,000 euros in total by the end of the period, underlined Jörg Hofmann, president of IG Metall, on Friday morning. However, the increase is not enough to offset inflation, currently above 10% across the Rhine, and which should continue next year at a high level.
However, the wage agreement contributes to “stabilize the situation”, maintaining the purchasing power of employees, added the union official. IG Metall, which negotiated for the sectors which pay the highest wages, is a powerful factor of economic and social stabilization across the Rhine.
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