IG Metall is Germany’s most powerful trade union. And traditionally it’s the metalworkers who, with their wage demands, also give the signal to other sectors in the country. This collective bargaining leadership carries a great deal of responsibility. This year this is particularly true. Because the economic situation is not only shaped by the aftermath of the corona crisis and the far-reaching consequences of the war in Ukraine, but also by record-breaking inflation.
IG Metall boss Jörg Hofmann is attempting a balancing act with the recommended demand for a seven to eight percent increase in wages decided by the union board. On the one hand, the 3.7 million employees in the metal and electrical industry are expecting a strong salary increase after the poor Corona emergency closure last year. On the other hand, if collective agreements are too high, the wage-price spiral threatens to really get going – which in the end would only result in even higher inflation.
Currently, the inflation rate in Germany is already 7.9 percent and thus at the highest level for almost 50 years. The Bundesbank expects inflation of 7.1 percent for the year as a whole. Measured against this, the union leadership considers the range of targeted wage increases to be quite moderate. If inflation had been fully compensated for, the number would have been in double digits, according to the trade unionists. After all, it is about the current year, which is by no means settled with the one-off payment, and about 2023.
The employers in Germany’s most important industry, which also includes the automotive industry and mechanical engineering, consider the demand to be irresponsible. Gesamtmetall President Stefan Wolf calls for more consideration for the companies that are groaning under historical cost increases and have still not reached the pre-corona level.
In a current survey by Gesamtmetall, 94 percent of all companies said they were affected by the cost explosion, 80 percent to a substantial extent. Just one percent of all metal and electrical companies are able to pass on the cost increases through price increases to their customers. One in five companies sees their very existence threatened by this development.
Union boss Hofmann assesses the situation in the industry far more favorably. In a survey, for example, works councils mostly confirmed that their companies had good earnings.
The order books are full as never before. Hofmann also reminds that the employees only received a one-off payment this year due to the pandemic, which does not apply to the table, i.e. does not mean a permanent wage increase. The expectations of the employees are now correspondingly high.
However, Hofmann also makes it clear that collective bargaining alone is not capable of compensating for high inflation for employees. Rather, the state is also required to cushion the burden on the population, as has already been done with the previous two relief packages.
Each employee receives 300 euros in September, and there is also 100 euros for each child. Hofmann emphasizes that further steps are needed here. IG Metall is also pushing for a special tax for companies that are even benefiting from the current crisis. This is the case, for example, in the steel industry, which is currently able to push through high prices on the market.
The board’s vote is not final, but will only be discussed by the regional wage committees in the coming weeks and then finally confirmed by the board in July. As a rule, however, the regional collective bargaining commissions no longer deviate from the recommendation of the board of directors. The peace obligation ends in October. The collective bargaining round is likely to drag on until November.
Federal Chancellor Olaf Scholz is aiming for concerted action by trade unions, employers and the government in the fight against inflation. Hofmann makes it clear for IG Metall, however, that his union is already showing a sufficient sense of responsibility with the current wage demand. If Scholz was hoping for voluntary wage restraint, the signal from IG Metall is likely to disappoint him.
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