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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Introduction Contd...

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 Bank7 (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 workers8 as 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.

Background Note

In 1891, Deutsche Metallarbeiter Verband (DMV) or German Metalworkers' Federation was founded to protect the interests of metal industry workers in Germany. DMV was the forerunner of IG Metall. DMV believed in the principle of 'one union for one industry', i.e., only one union should represent the interests of the workers of a particular industry.

DMV grew in strength, and by 1914 it had become the largest trade union in Germany. It contributed actively to the development of industrial relations in Germany at the time. However, the two World Wars fought by Germany and the great depression9 in 1929 left the trade union movement in disarray, severely crippling DMV and other trade unions...

Excerpts >>

7] The European Central Bank is one of the world's largest central banks, in charge of fiscal and monetary policy for the European Union's official currency, the Euro. The ECB was established on June 1, 1998 and headquartered in Frankfurt, Germany.

8] The term "blue collar workers" is generally used to represent the working class i.e. workers who do manual work. "White collar workers" do less manual labor work and are generally paid higher salaries.

9] The Great Depression was a massive economic decline that started in 1929 and ended in the late 1930s. During this period, several banks collapsed, there was a steep rise in unemployment levels, and closure of many businesses, including many related to heavy industry.

  

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