German industrial workers to get pay raises in 2-year deal

Nov 17, 2022, 10:05 AM | Updated: Nov 18, 2022, 12:45 am

FILE -- An employee in protective clothing takes a sample from the furnace at the steel producer, S...

FILE -- An employee in protective clothing takes a sample from the furnace at the steel producer, Salzgitter AG, in Salzgitter, Germany, Thursday, March 22, 2018. Germany’s biggest industrial union has agreed with employers on a pay deal that will see millions of workers get raises totaling 8.5% over two years as well as one-time payments meant to cushion the effect of sky-high inflation. (AP Photo/Markus Schreiber,file)

(AP Photo/Markus Schreiber,file)

BERLIN (AP) — Germany’s biggest industrial union agreed with employers Friday on a pay deal that will see millions of workers get raises totaling 8.5% over two years as well as one-time payments meant to cushion the effect of sky-high inflation.

The IG Metall union and employers reached a compromise in the southwestern state of Baden-Wuerttemberg, a key industrial region. In Germany, wage deals are typically hammered out in negotiations between employers’ organizations and unions that cover a whole sector, and an agreement reached in one region is generally applied nationwide.

IG Metall negotiates for workers in the auto and machinery industries among others, representing a total of more than 3.8 million workers.

The union initially demanded an 8% pay increase and a one-year deal. It first made the demand in early July; since then, Germany’s annual inflation rate has risen from 7.6% to 10.4%.

In their fifth round of talks, both sides agreed to raises of 5.2% next June and another 3.3% in May 2024. On top of that, workers will get one-time payments of 1,500 euros ($1,550) each at the beginning of 2023 and another 1,500 euros a year later.

German Chancellor OIaf Scholz, who has sought to find ways with unions and employers to address the impact of rising prices while preventing an inflationary spiral, has been keen to promote such tax-free payments of up to 3,000 euros.

“We have succeeded in an extremely challenging time in appreciably unburdening employees, sustainably stabilizing incomes and strengthening purchasing power,” IG Metall Chairman Joerg Hofmann said in a statement. He argued the agreement would strengthen the German economy, which is expected to shrink next year.

The chief negotiator for employers’ association Suedwestmetall, Harald Marquardt, said the outcome was acceptable but “certainly painful in many points and absolutely at the limit of what the majority of our members think is sustainable.” He said employers agreed partly because of the need to head off strikes in an already uncertain situation, and the deal offers calm for what are likely to be two difficult years.

Wage deals in Germany, Europe’s biggest economy, are being watched as inflation flares across the 19-nation euro area and the European Central Bank raises interest rates rapidly in an effort to tame it. ING economist Carsten Brzeski said Friday’s outcome “shows what a compromise can look like.”

“It won’t be enough to fully offset the drop in purchasing power caused by higher inflation, but it softens the damage,” Brzeski said in a research note. “For the ECB, it signals that second-round effects remain dampened and that a lower, subdued inflationary pressure can last for longer than markets currently think.”

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


File - Alphabet CEO Sundar Pichai, left, and OpenAI CEO Sam Altman arrive to the White House for a ...

Associated Press

Regulators take aim at AI to protect consumers and workers

As concerns grow over increasingly powerful artificial intelligence systems like ChatGPT, the nation’s financial watchdog says it’s working to ensure that companies follow the law when they’re using AI.

2 days ago

FILE - A security surveillance camera is seen near the Microsoft office building in Beijing, July 2...

Associated Press

Microsoft: State-sponsored Chinese hackers could be laying groundwork for disruption

State-backed Chinese hackers have been targeting U.S. critical infrastructure and could be laying the technical groundwork for the potential disruption of critical communications between the U.S. and Asia during future crises, Microsoft said Wednesday.

3 days ago

FILE - President Joe Biden speaks in the East Room of the White House, May 17, 2023, in Washington....

Associated Press

White House unveils new efforts to guide federal research of AI

The White House on Tuesday announced new efforts to guide federally backed research on artificial intelligence

4 days ago

FILE - The Capitol stands in Washington D.C. (AP Photo/J. Scott Applewhite, File)Credit: ASSOCIATED...

Associated Press

What it would mean for the economy if the US defaults on its debt

If the debt crisis roiling Washington were eventually to send the United States crashing into recession, America’s economy would hardly sink alone.

5 days ago

FILE - Bryan Kohberger, left, looks toward his attorney, public defender Anne Taylor, right, during...

Associated Press

Judge enters not guilty pleas for suspect in stabbing deaths of 4 University of Idaho students

A judge entered not guilty pleas Monday for a man charged in the stabbing deaths of four University of Idaho students, setting the stage for a trial in which he could potentially face the death penalty.

6 days ago

FILE - Mark Zuckerberg speaks at Georgetown University, on Oct. 17, 2019, in Washington. European U...

Associated Press

Facebook parent Meta hit with record fine for transferring European user data to US

The European Union slapped Meta with a record $1.3 billion privacy fine Monday and ordered it to stop transferring user data across the Atlantic by October, the latest salvo in a decadelong case sparked by U.S. cybersnooping fears.

6 days ago

Sponsored Articles

Internet Washington...

Major Internet Upgrade and Expansion Planned This Year in Washington State

Comcast is investing $280 million this year to offer multi-gigabit Internet speeds to more than four million locations.

Compassion International...

Brock Huard and Friends Rally Around The Fight for First Campaign

Professional athletes are teaming up to prevent infant mortality and empower women at risk in communities facing severe poverty.

Emergency Preparedness...

Prepare for the next disaster at the Emergency Preparedness Conference

Being prepared before the next emergency arrives is key to preserving businesses and organizations of many kinds.

SHIBA volunteer...

Volunteer to help people understand their Medicare options!

If you’re retired or getting ready to retire and looking for new ways to stay active, becoming a SHIBA volunteer could be for you!

safety from crime...

As crime increases, our safety measures must too

It's easy to be accused of fearmongering regarding crime, but Seattle residents might have good reason to be concerned for their safety.

Comcast Ready for Business Fund...

Ilona Lohrey | President and CEO, GSBA

GSBA is closing the disparity gap with Ready for Business Fund

GSBA, Comcast, and other partners are working to address disparities in access to financial resources with the Ready for Business fund.

German industrial workers to get pay raises in 2-year deal