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Mercantile Laws – II

Notes 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.

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 Germany. 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.” 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 bargaining.
In Germany, most negotiations for collective bargaining and other agreements are
negotiated between the trade unions and regional employer associations representing the
entire sector rather than with individual companies.

Earlier in January 2006, IG Metall had demanded a five percent increase in pay as it felt that
these companies were making huge profits. It said that the increase in pay would help the
members cope with the rising cost of living, increase their purchasing power, and to
withstand the increase in valued added tax from 16 percent to 19 percent, which the
German government proposed to implement in 2007.
The agreement would also influence inflation and price stability in the German economy,
and have repercussions on the wider European economy. Earlier, the European Central
Bank (ECB) president, Jean-Claude Trichet, warned German companies against allowing
any pay increase. He said that if the pay demand was met, the ECB would be forced to raise
interest rates to counter inflation.
Controversy is not new to IG Metall. Over the decades, the union has played an important
role in German labor relations and is considered by many as the pioneer in collective
bargaining in Germany. IG Metall has both blue and white collared workersas its members.
Though it is primarily a metalworkers’ union and represents the metal industry labor, it
has members from other industry sectors as well. Over the years, IG Metall has made
significant contributions to the evolution of industrial relations in Germany. But, it has
also been accused of irrational protection and harming the interests of workers and
employees. The achievements and accusations present a contrasting and interesting picture
of a trade union in a changing business environment.

Source: http://www.icmrindia.org/casestudies/catalogue/Human%20Resource%20and%20
Organization%20Behavior/IG%20Metall-Trade%20Union%20in%20Crisis-Human%20Resource%
20Management.htm

Self Assessment

State whether the following statements are true or false:

1. The legislation regulating these trade unions is the Indian Trade Unions Act, 1926.
2. The Act is applicable only to the union of workers.

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