Collective Agreement on Pay and Working Time Flexibility (February 2004)

1. On February 12th, 2004, IG Metall settled a pilot collective agreement on pay increase and additional forms of working time flexibility in Baden-Württemberg (South-West of Germany). In the meantime, the content of that agreement is adopted by almost all other regions with the exception of Saxony (part of eastern Germany).

2. In brief - main features of the new collective agreement:
- Pay increase of 2,2 % in the year 2004 and of 2,7 % in 2005
- Working time: 35 hours remain to be the regular weekly working hours but new forms of working time flexibility are agreed to.
- There is no unpaid increase of working time.

3. Pay increase:
- Pay rise of 2,2 % on March, 1st, 2004, but no increase for January 2004 and February 2004;
- Pay rise of 2,7 % on March,1st, 2005;

The payment is made in two ways: 0.7 % out of the whole increase of 2.2 % (2004) respectively 2.7 % (2005) are paid as a lump sum. The remaining 1.5 % (2004) respectively 2 % (2005) are integrated into and applied to the wage/salary group. That procedure is due to the ongoing adjustment of blue collar and white collar pay systems and their transformation into one single pay system.

The labour cost effect, which is usually calculated on an annual basis, is somewhat different. In 2004, the labour cost effect amounts to 1.8 % - the difference is due to the fact that there is no pay increase for the two months January/February 2004. In 2005, the labour cost effect is 2.6 %.
Working time: new forms of flexibility:

The agreement contains a new regulation on working time flexibility. The contract differs between four cases and stipulates for them:

(1) In those plants, where the share of “highly skilled workers” (exactly defined in the agreement ) exceeds 50 % of the workforce, up to 50 % of the workforce can work 40 hours (permanently). The old contract stipulated only 18 %.
“time corridor”
35 hours 40 hours
18 % (old) 50 % (new)

(2) In case of lack of skilled workers or

(3) In cases, where innovation processes require a different working time - the working time for certain groups or section of the workforce can be extended till 40 hours.

(4) In case of difficulties with the recruitment of new employees, the employer are allowed to bridge the time (up to six months) by increasing working hours - but enterprises with a working time account system must first use the flexibility of that time account.

Pay for increased working hours: Every increase of working hours must be paid (at normal wage rate), but there is no overtime premium paid for the above mentioned “time corridor”.
In all of the above mentioned cases, works councils as well as representatives of the IG Metall have a say in the concrete process of decision taking on plant level.

4. Time of validity of the contract
The validity of the new collective agreement lasts till 28th of February 2006 (26 months).

5. Short Assessment:
- The volume of pay increase in the year 2004 is slightly below that, what the distribution rule (productivity + inflation rate = forecast : 2.4 %) defines.
- The volume of pay increase in the year 2005 will be presumably within the distribution rule.
- IG Metall could reject an unconditioned and unpaid increase of working hours as the employers demanded.
- IG Metall could reject the intention of the employer federation to have agreements on plant level and to exclude unions from having a say in this cases.
- Taking into account the weak economic situation, the decisiveness of the employer federation as well as the expectations of the rank and file, one must say: the agreement is acceptable.
- By and large, the IG Metall could gain ground under pretty difficult economic and political circumstances.