Amid inflation and great uncertainty from the war in Ukraine, employers and the IGBCE union in the chemical and pharmaceutical sector have reached a landmark wage agreement. In order to cushion the enormous price increases, the 580,000 employees will each receive a one-off payment of 1,400 euros. There is an exception for companies in need, they can reduce the one-time payment to 1000 euros. Apprentices receive 500 euros. Out of consideration for the economic insecurity that war and the energy crisis mean for companies, the IGBCE has also renounced its original demand for a permanent increase in wages. This is to be negotiated again in October, when the term of the collective bargaining agreement ends after seven months.
The importance of the degree goes well beyond the industry. This is the first major bargaining round to take place in Ukraine since the war broke out – and thus in times of rising energy prices and inflation that is at its highest level in 40 years. Most recently it was 7.3 percent. The question was how the union and employer would react to this.
The outbreak of war had put the social partners in a difficult position. On the one hand, it was clear to both sides that employees expect compensation in view of the sharp price increases, i.e. more money. On the other hand, the situation in Ukraine is leading to enormous uncertainty in companies. In many companies, the crisis teams are meeting these weeks and going through scenarios: what if energy gets even more expensive? What if Russia’s President Vladimir Putin turns off the gas tap or the federal government orders an import ban?
The chemical industry would be particularly hard hit because it needs a lot of energy. They account for 15 percent of German gas consumption. The industry also needs the gas as a raw material. From this, it produces intermediate products such as ammonia or methanol, which are contained in fertilizers, pharmaceuticals and plastics, for example. If there was a shortage of gas in Germany, production in chemical companies could come to a standstill – because it is considered certain that before people in this country can no longer heat next autumn, industry will first have to be off the grid.
Employers fear that this could plunge many companies into a crisis, even if the 2021 financial year was good for most and nobody currently knows whether the gloomy scenarios will really materialize. The chemical union IGBCE recognized this, following the constructive tradition that characterizes collective bargaining in the industry. “In this time of great uncertainty for employees and companies, we had to find a solution that combines inflation relief with job security,” said her boss Michael Vassiliadis about the result. “With this compromise, the employees will be relieved immediately and the economic development will be closely evaluated.” Employers see it similarly: “With the crisis bridge, we are giving companies and employees a much-needed breathing space,” said their chief negotiator, Hans Oberschulte. “This is the right answer to the maximum insecurity we’ve seen since Putin’s invasion.”
Union still wants higher wages in 2022
However, it is also clear that the IGBCE can only be satisfied with the conclusion as an interim solution. Inflation could fall again a little in a few months, but is forecast to remain high overall. This raises the expectations of workers, on whose membership dues the IGBCE depends. Her boss Vassiliadis therefore emphasized with a view to the next negotiations in October: “Our goal remains the permanent increase in wages this year.”
The workers with less money benefited disproportionately from the one-off payment that has now been agreed, emphasizes the union, and that is right: After all, they are the ones who suffered the most from the price hikes. Converted to the average annual salary in the industry, the one-time payment of 1,400 euros corresponds to a surcharge of 5.3 percent, according to the IGBCE. It is therefore also impressive with regard to the current inflation.
Negotiators from other trade unions and employers will also take a good look at the deal. The rounds in the metal and electrical industry and in the public service of the federal and local governments begin in autumn. Then it’s about the salaries of about seven million workers.