(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

 

LONDON  - Germany’s IG Metall is nothing if not gutsy. The powerful trade union, which represents 2.7 million metal and electrical workers, is considering demanding a reduction in working hours, but without a proportional pay cut. Its wish may come partly true.

Trimming hours makes sense for both employers and employees. GDP in Europe’s biggest economy was 10.1% less in the second quarter than in the first. Demand remains weak at home and abroad, so many German companies have more workers than they need. Cutting payrolls is possible, but involves hefty redundancy payments. Cutting hours allows bosses to reduce costs while retaining skilled employees. For workers, saving jobs is a priority during a recession.

The per-hour pay raise part of the IG Metall wish list is something else. Employers only accept such worker gains when the economy is thriving. In 2018, they agreed with the union to allow members up to two years of 28-hour working weeks.

But now the auto sector, which employs many of the union’s members, is in the throes of a job-cutting transition to electric vehicles. Volkswagen's luxury car unit Audi said in November that it would axe up to 9,500 jobs, or more than 10% of its total staff, by 2025. Car suppliers Continental and Osram Licht also announced staff and cost cuts last year.

German workers understand what is going on, and are being flexible. Daimler  employees, for example, will reduce their working week by two hours for a year from Oct. 1, without changing hourly pay.

That sort of agreement reduces IG Metall’s negotiating leverage. Nor can the union count on much public sympathy for its argument that its members can’t afford to earn less. These are generally well-paid workers and Germany’s progressive tax system means the decline in net pay would be smaller than the drop in gross salary.

That said, IG Metall seems to be showing some realism. The union will struggle to negotiate big wage rises in the current environment, so saving jobs and trying to secure a per-hour pay rise by another route may be the best it can do. Even so, some of its desires look close to impossible.

 

CONTEXT NEWS

- Germany's largest trade union, IG Metall, on Aug. 15 proposed negotiating for a move to a four-day week to help secure jobs against the economic fallout from the coronavirus crisis and structural shifts in the automobile industry.

- IG Metall leader Joerg Hofman told the Sueddeutsche Zeitung daily that if companies agreed to cut working time, employees should not necessarily see their salary cut by the same amount, or they would not be able to afford to work fewer hours.

- Germany’s Verdi and dbb labour unions on Aug. 25 demanded a 4.8% wage increase over a period of 12 months for more than 2.3 million public sector workers in the federal government and municipalities.

 

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

(Editing by Edward Hadas and Oliver Taslic) ((swaha.pattanaik@thomsonreuters.com; Reuters Messaging: swaha.pattanaik.thomsonreuters.com@reuters.net))