2021 Metal and Electrical Collective Bargaining Round Explained: What the metal industry collective bargaining agreement means for you

Many companies are in crisis due to the pandemic. Added to this is the transformation driven by factors such as digitalization and the shift to electric vehicles. This process can take years, during which there may not be enough work for all employees at a given company. For this reason, securing their jobs is the top priority for many workers. This was also demonstrated by IG Metall’s online survey of 250,000 workers conducted at the end of 2020.

Our solution: If there isn’t enough work for all employees at a company, we should redistribute the work more effectively instead of laying off employees—specifically by temporarily reducing working hours.

Our existing models have not been sufficient to bridge a longer-term transformation, such as the transition to electric cars. Short-time work, for example, will again be limited to a maximum of one year starting in 2022. And while our collective bargaining agreements on job security already allow for a reduction in working hours of five to six hours per week—without allowing for layoffs for operational reasons—we were only able to enforce this for six months.

That is why we wanted new models that would allow us to reduce working hours for a longer period while preventing layoffs.

We have now achieved this with our collective bargaining agreement in North Rhine-Westphalia. We have the 4-day workweek: To manage the transformation, working hours can now be reduced to up to 32 hours per week for up to three years, including in individual areas of the company, preferably spread over four days a week.

Layoffs for operational reasons are prohibited for the duration of the reduced workweek. The other collective bargaining regions have adopted the new rules from North Rhine-Westphalia—or agreed to similar provisions. In Baden-Württemberg, for example, it is also possible to reduce working hours to as few as 28 hours, with no time limit.

To compensate for the loss of pay resulting from the reduction in hours, a partial wage compensation is provided to keep monthly wages stable. (See the section below titled “Strengthening Incomes.”)

To ensure our jobs truly have a future, our companies must invest—in the location, in new products, in technology, and in training. Yet our surveys show that half of the companies have no plan for the future and are underinvesting.

That is why we want to agree on concrete plans for the future of the company in future collective bargaining agreements. Until now, this has usually only worked when the company was already in crisis and the employer approached us on its own initiative to negotiate cuts in staffing and wages. After all, in our economic system, it is the employer who decides how money is invested.

However, in our collective bargaining agreement, we have now secured the right to take the initiative ourselves and call on the employer to engage in discussions about the future. This allows us to intervene earlier than before—rather than waiting until a crisis has already struck and must be resolved.

Many workers have lost money due to the COVID-19 crisis. They were able to spend less money, which in turn significantly exacerbated the crisis. That is why we were determined to stabilize incomes with a 4 percent increase in total compensation, which can also be used during crises as partial compensation for reduced working hours.

We have essentially achieved this with the collective bargaining agreement in North Rhine-Westphalia.

In June, there will initially be a net, tax-free COVID-19 bonus of 500 euros; for apprentices, the amount is 300 euros.

In February 2022, 18.4 percent of monthly pay will be provided as a transformation allowance or “T-money” (known in Baden-Württemberg as the “transformation module” or “Trafo module”).

Starting in October 2022, IG Metall will then be able to negotiate new pay increases again.

However, the transformation allowance will remain in place permanently. Starting in February 2023, 27.6 percent of the monthly pay will be provided as a new annual lump-sum payment, to be paid every year thereafter.

Partial Wage Compensation for Reduced Working Hours: Alternatively, the “T-Geld” (or Trafobaustein) can also be converted into time off to reduce working hours in order to secure jobs. This partially offsets wage losses resulting from a reduction in working hours.

Employers also contribute to this. Here’s how the new provision from the collective bargaining agreement in North Rhine-Westphalia works: If the reduction in working hours lasts longer than one year, the employer pays partial wage compensation equal to 25 percent of the hourly wage when working hours are reduced to 32 hours per week. If the reduction in working hours lasts more than two years, partial wage compensation amounts to 25 percent for a 33-hour workweek and 50 percent for a 32-hour workweek.

In addition to the transition allowance, other special payments may also be included in the partial wage compensation, such as the collectively agreed supplementary allowance and the vacation pay. This brings the total to just over 34 paid hours for a 4-day workweek with a 32-hour workweek.

IG Metall has negotiated similar arrangements in other collective bargaining regions.

This secures jobs—while still keeping monthly pay stable. As a result, employees can afford the reduced workweek even over a longer period of time.

Dual students study simultaneously at a university and in a company. There are now 110,000 of them nationwide. Until now, however, they were generally excluded from our collective bargaining agreements because they are not legally considered apprentices.

With the collective bargaining agreement in North Rhine-Westphalia, it is now clear: For dual students in a training-integrated dual study program who also have a traditional apprenticeship contract, collective bargaining agreements apply during their training—no ifs, ands, or buts. This means, in particular, that the collective bargaining provision for permanent employment after training applies.

Further discussions will take place through the end of September on how collective bargaining provisions can be extended to other dual students, such as those in the practice-integrated model. IG Metall and employers in North Rhine-Westphalia recommend hiring dual students into permanent employment upon successful completion of their studies.

The dual study programs vary greatly from one federal state to another. In many collective bargaining regions, negotiations on appropriate regulations are still ongoing.

In Baden-Württemberg, IG Metall has already extended the collective bargaining terms for apprentices to include approximately 10,000 students at the Dual University (DHBW) effective immediately.

IG Metall and employers in North Rhine-Westphalia have also issued a joint statement on the importance of the next generation of skilled workers. In this way, the social partners aim to promote companies’ willingness to provide training. The collective bargaining-based hiring of trainees is guaranteed.

In the East, IG Metall has been campaigning for working conditions to finally be gradually brought in line with those in the West. Thirty years after reunification, workers in the East German metal and electrical industries still work three hours longer than in the West—namely 38 hours per week instead of 35. Unpaid. That amounts to 8.5 percent less hourly pay. For years, employers blocked a solution.

Now, a breakthrough has finally been achieved: At the end of June, IG Metall Berlin-Brandenburg-Saxony negotiated a collective bargaining framework with employers for company-specific solutions to align working conditions with those in the West. IG Metall reached agreements with Volkswagen Saxony, ZF, SAS, and other companies, establishing binding phased plans for the alignment of working hours. The first phase, involving the reduction of working hours to 37 hours, will begin there on January 1, 2022. By the end of the adjustment process, the collective bargaining standard for a 35-hour workweek—as in West Germany—will be fully in effect starting in 2027.

Negotiations with other companies are ongoing. This affects 80 percent of IG Metall members in the East German metal and electrical industry.

Employers also made gains in the negotiations. The additional amount of the collectively bargained bonus (T-ZUG), totaling approximately 400 euros annually, will be postponed from July to October in 2021 due to the crisis. If the company’s net return falls below 2.3 percent of revenue as a result of a crisis, the employer may withhold payment of the additional amount (T-ZUG B). However, this must be reported to IG Metall and substantiated.

The standard collective bargaining bonus (T-ZUG A) of 27.5 percent of monthly pay is not affected by this.

Automatic collective bargaining cuts to other special payments, which employers had demanded, are off the table. Likewise, IG Metall in Baden-Württemberg has successfully opposed the elimination of collectively bargained break and shift premiums, as well as restrictions on retirement benefits.

And, of course, we did not receive the 4 percent pay increase that had been demanded. The new “transformation allowance,” when calculated on a monthly basis, amounts to 2.3 percent. In negotiations, you always end up meeting somewhere in the middle.