October 10, 2017 / 11:08 AM / a year ago

German union pushes for 6 percent pay hike, flexible hours

FRANKFURT/BERLIN (Reuters) - Germany’s largest trade union on Tuesday pushed for six percent more pay and reduced working hours for the nearly four million workers in the metals and electrical sectors, in what it said was a drive for a better work-life balance.

The demands by IG Metall reflects growing self-confidence among trade unions as Europe’s biggest economy is set to grow by roughly 2 percent this year and unionists say employees should get a fair share of the success.

“There is no reason for restraint,” IG Metall head Joerg Hofmann told reporters, pointing to solid growth in the industrial sector and the economy’s overall strong performance.

The pay demand for 6 percent compares with a national claim for 5 percent in the last round in early 2016, which resulted in a settlement of a 2.8 percent increase on July, 1 2016 and a further 2.0 percent on April, 1 2017.

Hofmann called for a fundamental change in the way managers deal with working time. Employees now put a bigger emphasis on work-life balance and this requirement for more flexibility must be reflected in any wage deal, he said.

IG Metall is campaigning for shift workers and those caring for children and other relatives to be allowed to reduce weekly hours to 28 from 35 - with a right to return to full-time work after two years.

The head of the employers association Gesamtmetall, Rainer Dulger, rejected the demands, saying overall wages in the sector had risen by nearly 20 percent over the past five years.

“From year to year, it’s getting harder to afford this,” Dulger warned, adding that a right to reduced working hours would further exacerbate the shortage of skilled workers.

The demands, presented by IG Metall’s board for the 2018 wage negotiations, still need to be approved by its regional branches on Oct. 24. Talks are expected to start mid-November.


The proposal could complicate the European Central Bank’s efforts to get inflation back up to its target of at-or-just-below 2 percent.

A shorter week of 28 hours could lead to less dynamic wage growth in the currency bloc’s largest economy if employers should agree to the demand in exchange for a lower pay hike.

But wage pressure could also rise given the resulting need for more workers and the demand for 6 percent wage growth.

Bundesbank Chief Economist Jens Ulbrich said the union was moving into uncharted territory with its ideas.

“At this point, it’s quite difficult to assess the impact of this trend on overall wage development,” Ulbrich told Reuters.

Both the Bundesbank and the ECB are keeping a close eye on the negotiations for any sign that wage growth is picking up, potentially lifting inflation and allowing the ECB to start winding down its massive stimulus programme.

“If applied in practice, concept proposals by German unions to demand shorter working weeks instead of asking more money will not make the ECB’s life any easier,” ING Diba economist Carsten Brzeski said.

Economists explain the missing link between growth and inflation with the slack in labour markets, meaning there is a high number of people in low-wage jobs, involuntary part-time contracts or temporary arrangements.

Other reasons for sluggish wage growth include the growing trends of automatization, globalization and digitalization that help companies cut costs and avoid steep pay hikes.

Reporting by Michael Nienaber in Berlin and Ilona Wissenbach in Frankfurt; Editing by Jeremy Gaunt and Richard Balmforth

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