The German union IG Metall, the largest in Germany, has started a wage increase of 8.5% divided into two stages and a bonus of 3,000 euros free of taxes at the beginning of the agreement of the collective agreement for metal workers, the engine and electricity in the Baden-Württemberg region, one of the most powerful in the country.
In Germany wage agreements are normally negotiated between employers and unions covering an entire sector, and an agreement reached in one region is generally applied at the national level.
The agreement, which can serve as a reference for the almost 4 million workers in the sector, contemplates a wage increase of 5.2% from June 2023 and 3.3% from May 2024. Initially the union asked 8% in a single year.
On the other hand, there will be a payment of 1,500 euros in each of the two years -one at the beginning of 2023, the other in 2024- as a compensation premium for the increase in inflation. This bonus will be tax-free, according to union president Jörg Hofmann. The German Chancellor, Olaf Scholz, has looked for ways to give salary increases but without causing an inflationary spiral, he has supported single payments.
The new collective agreement will be valid until September 30, 2024 and the board of directors of IG Metall has recommended applying it in all areas of collective bargaining, thus ending five rounds of negotiations and the threat of strike action in a key sector of the largest economy in Europe. From the side of the companies, grouped in the Suedwestmetall employers' association, it is affirmed that the agreement was "at the limit of what the majority of our members think is sustainable". The threat of strikes and the arrival of two years of uncertainties have were factors that led them to agree.
The union says the pact will strengthen the economy by lessening the loss of purchasing power. German inflation stands at 11.6%, according to the latest Eurostat data. It is more than double the 4.6% of just a year ago and one point above the eurozone average, a figure that is straining wage negotiations across Europe. "The inflation compensation premium and the percentage increase provide employees with significant relief in view of the rising prices," added Hofmann.
