German unions reach pay agreement in metal and electrical sector

Germany’s biggest union has announced a breakthrough in pay talks for 3.9mn employees in the automotive, metal and electrical sector, averting the threat of more strikes and partially compensating workers for inflation.

IG Metall said the collective bargaining agreement for workers in the Baden-Württemberg region would give them a 5.2 per cent pay rise next year followed by a 3.3 per cent pay increase in May 2024. They will receive lump sum payments of €1,500 in each of the next two years.

The pact underlines how European trade unions are becoming increasingly aggressive in their demands for pay to keep pace with inflation, which hit a record in the eurozone of 10.6 per cent in the year to October.

The deal, which was revealed on Friday following weeks of talks and one-hour warning strikes by 900,000 workers, is below the initial demand for an 8 per cent annual pay rise submitted by IG Metall, but it is well above the employers’ initial offer.

The accord is likely to form the basis for others across the country. The initial offer from employers, which include most German carmakers and engineering groups, was to give workers only a €3,000 lump sum payment spread over 30 months.

“The employees will soon have significantly more money in their pockets — and permanently,” said Jörg Hofmann, chair of IG Metall.

“Added to this is the tax and duty-free inflation compensation premium. Both together — inflation compensation premium and percentage increase — bring the employees a noticeable relief in view of the increased prices.”