Germany's largest union IG Metall reached a deal with Suedwestmetall employers' federation on a 4.3 percent rise in wages over 27 months and decreased working hours on Tuesday.
The IG Metall local unit in the southern Baden-Wurtemberg state organized several 24-hour strikes to pressure employers for workers' demands. It's expected the measures will be implemented soon in the rest of Germany. IG Metall is Europe's largest industrial union, and the agreement may influence future payment discussions in the country.
The raise falls below the demanded 6 percent raise over one year, but the union considers the agreement a victory, as it settled for other benefits. An initial amount of 6.8 percent was offered, but the union turned it down in exchange for more additional one-time payments and reducing working hours.
Now, workers have the right to work 28 hours a week to take care of children or sick or elderly relatives for up to two years, instead of the 35 hours standard.
“Workers’ priorities have shifted. Instead of higher wages, work-life balance is now in focus,” said Bayerische Landesbank economist Christiane von Berg.
The agreement also gives workers the possibility to choose between different one-time payments or taking more time off. The workers could get monthly one-off 100 euros payments in this year's first quarter. Starting next year, they would receive an annual 400 euros payment and another payment equivalent to 27.5 percent of their monthly salary.
Also, the union and employers agreed to ask workers to voluntarily increase their weekly hours up to 40 to make more money. Rainer Dulger, head of the Gesamtmetall union, called the agreement "the cornerstone of a flexible system of work for the 21st century."
According to Thilo Brodtmann, managing director of the VDMA engineering association, the deal may force medium-sized companies to seek labor agreements outside of IG Metall and other unions.
It's believed companies like Daimler, BMW, Airbus and other engineering firms and suppliers lost about 200 million euros (US$249) due to strikes.
Service workers union Ver.di is expected to announce its demands tomorrow.