IG Metall - A Trade Union in Crisis?

            
 
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Case Details:

Case Code : HROB084
Case Length : 16 Pages
Period : 1994-2006
Pub Date : 2006
Teaching Note : Available
Organization : IG Metall Trade Union
Industry : Diversified
Countries : Germany, Europe

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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"There is no union that has more radical, more militant, more old-fashioned views than IG Metall."1

- Hans-Olaf Henkel, President, Federal Association of German Industry, in 2000.

"Whole economies are being blackmailed by ruthless global companies in the pursuit of even greater profit." 2

- Jurgen Peters, President, IG Metall Trade Union, in 2005.

Introduction

On April 24, 2006, an agreement was reached between IG Metall Trade Union (IG Metall, also known as Industrie Gewerkschaft Metall or German Metalworker's Union), one of the oldest and largest trade unions in Germany and Gesamtmetall National Employers' Group3 (Gesamtmetall) on the wage increase for the union's 3.4 million members. Under the agreement, which was valid for 13 months, its members would receive a wage hike of three percent from June 2006 and a one time payment of 310 Euros as bonus for the months of March, April, and May 2006. This agreement avoided a series of nationwide strikes that IG Metall had planned to hold in Germany.

Human Resource and Organization Behavior | Case Study in Management, Operations, Strategies, Human Resource and Organization Behavior, Case Studies

After the agreement, Gesamtmetall members threatened to cut jobs or move them out of Germany. They said that the agreement would increase labor costs and make exports less competitive.

It was estimated that an IG Metall worker in Germany made on an average about 25 Euros an hour when compared to 6 Euros per hour earned by a worker in East European countries. The employers also warned that this wage increase could threaten the recovery of the fragile German economy. They felt that the agreement would worsen the unemployment situation in Germany4. Anton Boerner, head of one of the employer's federation wrote, "It's going to be very, very difficult for employment in Germany. Three percent is simply too much."5 The agreement was of great significance to the German economy, the biggest economy in Europe, as it set the agenda for other trade unions in Germany in terms of collective bargaining6.

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1] Ewing, Jack. "Mellowing Out? Not This Union Boss," www.businessweek.com, January 31, 2000.

2] "Amicus and German Super Union IG Metall Pledge to Fight Globalization Together," www.amicustheunion.org, May 14, 2005.

3] Gesamtmetall is the employers' association for the metal and electrical industry, representing some of the most important industry sectors of the German economy such as mechanical engineering, electrical engineering, automobile manufacture, computers, and the aerospace industry.

4] In January 2006, the Federal Labor Agency in Germany, had reported that unemployment levels in the country had crossed 5 million (around 5.012 million). This translated into an unemployment rate of 12.1 percent.

5] Le Page, Isabelle. "German Employers Threaten To Shift Jobs Abroad," http://www.industryweek.com, April 24, 2006.

6] Collective bargaining is the negotiation process between trade union representatives and employers with regard to employment terms and conditions like wages, hours of work, working conditions and grievance-procedures, and about the rights and responsibilities of trade unions. The result of the negotiations is often referred to as a collective bargaining agreement.

 

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