Collective bargaining rounds in the chemical industry: The crisis is dampening wage policy – ​​but for how long?

With the rapid increase in inflation, there is growing concern among economists that wage policy will become a problem factor in its own right.

In its most recent economic analysis, the German Council of Economic Experts warned that there was a risk of “expectations of inflation being unanchored”, which could lead to “strong second-round effects or even a wage-price spiral” via higher wage increases.

Shortly thereafter, the official inflation rate reached its next high of 7.3 percent.

Dietrich Creutzburg

Business correspondent in Berlin.

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However, an appearance by the three leading industrial trade unionists does not quite fit the picture: Instead of getting employers and the public in the mood for high wage demands, Jörg Hofmann (IG Metall), Michael Vassiliadis (IG BCE) and Robert Feiger (IG Bau) have recently warned urgently of a decline in the industrial site.

Their warning referred to a possible failure of Russian gas supplies and its consequences for industrial value chains, i.e. not to wages at all.

But anyone preparing an offensive collective bargaining policy strikes a different note.

The Ukraine war changes everything

The chemical industry, which would not be able to produce without gas, is currently being put to the test.

On Monday and Tuesday, the chemical union IG BCE and the Federal Chemical Employers' Association (BAVC), representing 1900 companies, will meet for what will probably be the decisive negotiation.

At the appearance on the subject of gas supply, IG-BCE boss Vassiliadis also addressed this - with a two-part message: "If there really is a failure of gas supplies and it leads to a standstill in the industry with widespread consequences for jobs, then of course that will lift every collective bargaining round off the hook,” he said.

Then absolute crisis mode is announced.

However: "As long as we are not dealing with such an exceptional situation,

Compared to the starting line-up in February, that's already defensive.

Because the IG BCE was - as a result of the Russian attack on Ukraine - surprised by the explosive nature of its own wage demands.

Instead of a fixed percentage, she had demanded a “sustainable strengthening of purchasing power” for employees.

Strictly speaking, then, any increase in inflation would drive wage demands higher.

When the IG BCE decided on this, however, inflation rates of around 3 percent and no war were still expected.

After that, she soon made it clear: "Everything has been different since February 24."

The traffic light plans can help

However, this does not reduce the employees' loss of purchasing power, which is now making it more difficult for the union to manage expectations.

This also resonates with Vassiliadis.

On the one hand, he points to chemical companies that have boasted that they can pass the rise in energy and material prices on to their customers - "and if that's the case, then I want the same for our employees".

At the same time, however, Vassiliadis concedes: Of course, the confusing economic situation is a good reason to discuss “how to organize this in terms of time” in collective bargaining.

This was also reflected in statements made by employers: This time, one-off payments could be of particular importance for a compromise because, unlike the usual percentage increase, they do not immediately increase personnel costs permanently.

With a short contract period, however, the union would then have the opportunity to push through refills soon – as long as the industry does not come to a complete standstill due to a lack of gas.

In addition, the employers point to the effect of the relief packages with which the traffic light coalition is cushioning the rise in prices for private households;

including the planned 300 euros energy cost subsidy and a mileage allowance.

The BAVC has calculated that this will save up to 2.5 percent of the net income for chemical workers in the middle wage group – just under EUR 55,000 gross per year.

His conclusion: "This strengthens purchasing power and reduces the pressure to compensate for inflation through wage increases."

However, this does not eliminate the danger of a self-reinforcing wage-price spiral.

Because the next tricky collective bargaining rounds will come in the fall - that of IG Metall for four million employees in the metal and electrical industry and the Verdi collective bargaining round for almost three million civil servants.

By then, inflation will have eaten even deeper into the wallets of employees, which the German Council of Economic Experts also takes into account: "The momentum for wage demands is likely to increase from the second half of 2022."

However, the collective bargaining worlds are now being rearranged.

After many good years of upswing, industrial employees suddenly see risks for their jobs again, which can encourage a certain willingness to hold back on wages.

However, this concern is not common in the public sector.

Verdi has already demonstrated in smaller collective bargaining rounds how great the willingness to conflict is there.

When other parts of society were still under the shock of war, they called on air security forces and day-care center teachers to go on strike.