Collective bargaining rounds 2022: Inflation increases pressure on unions

Status: 01/31/2022 2:34 p.m

Collective bargaining could be tough this year. Many companies suffer from rising material costs and disrupted supply chains – the employees from high inflation. The unions are under pressure.

In the morning from 5.30 a.m. the parking lot in front of the Görres printing works near Neuwied fills up. The morning shift arrives at work. Thomas Dörr is the chairman of the works council at the medium-sized company and a member of the service union ver.di. The 59-year-old knows what worries the workforce: “Colleagues have been suffering from the sharp increase in fuel costs for months,” he says. “Many have to travel 60 kilometers or more. Less and less is left in their wallets.”

“Inflation forces us to act”

Collective bargaining will start in the family business in around two weeks. Since the beginning of the Corona crisis, wage demands have been waived, says Dörr. In addition, the company is still on short-time work – like so many other companies in the industry. “The situation in the printing industry has not been rosy for years,” says the trade unionist, “but high inflation is forcing us to demand a significant wage increase in the forthcoming negotiations.” The works council wants an increase of five percent. Despite repeated requests, management was not willing to talk.

The energy costs, rent or shopping in the supermarket are becoming more and more expensive, reports Dörr from the works council. “We have an in-house collective agreement that has been repeatedly extended by two or three years over the past decade. But this time we want a much shorter term. We have to see whether inflation is going up permanently and then follow suit if necessary,” says Dörr . From the start, he did not trust politicians’ statements that inflation was only temporary. “I’m afraid we’re only at the beginning of the development. That will also be reflected in the collective bargaining,” estimates Dörr.

Pressure on collective bargaining parties is growing

This puts the works council chairman from Rhineland-Palatinate in line with the union headquarters in Berlin. Ver.di boss Frank Werneke had already called for clearly noticeable increases in real wages in the coming wage negotiations in the fall. Reason are the price jumps for food, energy and petrol. For example, ver.di is now entering into collective bargaining for private insurance companies with a demand for five percent more money.

The collective bargaining parties are under great pressure overall before the wage rounds this year. The reason: Inflation has more than eaten up the low wage increases in the past year. Real wages have fallen for the first time in years. This is the result of figures from the Federal Statistical Office. The trade unions feel the expectations of their members that inflation will be compensated to some extent.

Unions against the loss of real wages

In March, particular attention is paid to the IG BCE, which negotiates for around 580,000 employees in the German chemical and pharmaceutical industry. For the powerful trade union, it is about an increase in wages above the rate of inflation. And the Food, Pleasure and Restaurant Union (NGG) also wants up to 6.5 percent more for the gastro industry, which has been hit by the Corona crisis.

In September, IG Metall will join the tariff ring. Her boss Jörg Hofmann does not want to commit to specific demands yet. However, employees expected a significant increase without real wage losses. For orientation: The federal government estimates inflation for the current year at 3.3 percent, after having reached the highest level in almost 30 years at 3.1 percent in 2021. So the target for collective bargaining seems to have been set.

Are inflation and wages driving each other up?

In addition to the monetary policy of the European Central Bank (ECB), the development of wages also influences inflation. Many economic experts warn that rising consumer prices and rising wages could continue to drive each other up – the so-called wage-price spiral.

Hagen Lesch from the research institute IW in Cologne does not see this danger – at least not at the moment. “Higher wage agreements are fundamentally inflationary. But I don’t see any excessive influence of salaries on inflation for the next few months,” says Lesch. Many collective agreements, such as in construction or trade, would have been agreed before inflation rose. Their remuneration would be below inflation rates and thus would not drive inflation.

“The trade unions will of course look at the high inflation figures. That also makes higher degrees more likely,” estimates Lesch. Only when all the factors such as increased wages, high energy prices and persistently disrupted supply chains come together can the high inflation become structurally entrenched. “That may be the case at the end of the year. Then we will know the results of the wage rounds and the development of the global economy under the influence of Corona. A sense of proportion is required from all sides in collective bargaining. But I trust all those involved.” In the end, however, Lesch cannot predict the exact development of inflation this year either. As with other experts in politics, science and associations, one thing prevails above all: uncertainty.

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