MNI INTERVIEW: German Union To Safeguard Jobs As Prices Surge

Germany's biggest union expects inflation to stabilise at around 2% ahead of next autumn's major pay negotiations, and its wage demands will balance concern over living standards with an awareness of the need to preserve employment as the country transitions to greener manufacturing, IG Metall's policy chief Thorben Albrecht told MNI.

"Our first priority is always to secure the jobs of our workers. Therefore we are mainly looking at how the government is able and willing to support the transition, both digital and green transition, we are facing in our industry," he said in an interview, noting that "huge investments" would be needed in sectors such as steel.

While German wages rose by 5.5% in the second quarter compared with the same period of 2020, and the 2.2-million-member IG Metall is already pushing bosses for a 4.5% increase for wood and plastic workers, different sectors depend on different factors, Albrecht said, adding that it was important Germany maintained its success in preserving jobs in its industrial sector as production greens.

"Neither the relatively high wages nor the rights workers enjoy here are really hindering good production or productivity. And you can see that Germany over at least the last 10 or 12 years in sum really hasn't lost any industrial jobs, so we're optimistic that we'll find a way to do this in the green and digital transition as well," he said.

TRANSITORY INFLATION

Higher prices will eat into workers' pay packets, but the rise in inflation, which hit 4.1% in September, prompting the chairman of services sector trade union Verdi to call for "clearly noticeable real wage increases", could prove transitory, said Albrecht, a former state secretary at the Federal Ministry of Work and Social Affairs.

"Maybe next year we might be back to 2%, which is of course still higher than what we've seen for a long time. And of course trade unions will take inflation rates into consideration," he said. But, he added: "I think it's more relevant when it comes to the question of whether jobs are here to stay, especially in industries such as the steel industry."

The question over whether price increases prompted by supply bottlenecks feed into sustained wage-push inflation has moved to the centre of monetary policy calculations in recent months, and Albrecht acknowledged that rising energy prices are a particular concern. But he saw little prospect of a wave of pay-related strikes.

"IG Metall has proven that we are very flexible, that we're very pragmatic, that we don't want to destroy companies at this critical juncture of the transition. But, of course, strikes are always a possibility if needed as part of a collective bargaining round," he said.

LOWER WAGES AT TESLA

Car makers face particular challenges during the shift away from combustion engines towards battery-powered vehicles, he noted.

"You need less workers to produce electric cars, because the engines are much simpler. But then the question is, will the battery production be in Germany, or will it be in Poland, or will it be in Asia?" Albrecht said. "But it's not that we are striking against moving from combustion engines to electric engines. There is an opportunity here, compared, for example, to the coal industry, where it's only about phasing out."