Employers unlikely to subsidise lower working hours

We still do not expect that employers will agree to subsidise lower working
hours. But we expect them to improve their wage offer further in exchange for
more symmetric working-time flexibility. During the 5 th round of talks, they
improved on their initial wage offer (2% plus a lump-sum payment) offering a
6.8% pay rise spread over 27 months.

In a similar vein, VW – which traditionally
has company-specific wage settlements – has beefed up its offer (3.5% starting
in May, plus 2% in May 2019, with the whole contract running for 30 months,
translating into annual increases of roughly 3% in 2018 and 2.5% in 2019). We
still believe that the final deal for the metal sector could be much shorter;
perhaps close to 4% and running slightly more than 12 months so that
employers could argue that the actual (annual) increase remains clearly below
the 4% threshold. Employers could alternatively offer a relatively high one-off
payment, which would have the additional appeal of not lifting the basis for
future wages.

Such an agreement might be reached in February, as works council elections
loom. IGM officials might be keen to have a settlement by then, which could add
to their election chances.