Wage restraint will not solve the problem
Mr. Kerner, the level of orders in the German machinery and equipment engineering sector, the most important industrial employer in Germany, is poor – and this has not just started recently. How would you describe the mood among employees?
The mood among employees is very tense. We had high order backlogs after the Covid period because there was a lot to catch up on. Now we have been facing underutilisation for quite some time. Until now, these dips were always very brief because, due to the high export share in the industry, there were always compensating developments somewhere. But the constant decline across all sub-sectors is now quite unusual, and unsettles our colleagues.
No company has ever gone bankrupt because of IG Metall.
Given this background, the upcoming collective bargaining negotiations are likely to be difficult, due to high wage demands. Or are you quite optimistic? Though in public, this might be hard to convey.
I don’t believe that „the public“ has a unified stance on this. Broad sections of society are experiencing financial strain themselves, and thus have an understanding of our demands. Regarding the situation in companies, we as trade unions have always acted very responsibly in recent years. Consider the inflation compensation bonus, which only addressed peaks temporarily. But by now, everyone knows that prices will remain high permanently. And here, wages need to catch up. Therefore, we consider a demand of 7% to be appropriate and reasonable, especially since the labour cost share in machinery construction is around 16%, which is not the decisive figure. The influence of energy costs and many other factors is also quite large.
Now you are also raising the expectations of employees. How will you manage to temper that?
The employees accepted the one-time payments, even though the call for a general wage increase was already strong at that time. And since prices are now permanently high, we also need a generally higher wage level. Of course, we always consider the situation of individual companies, in the spirit of the Pforzheim Agreement. With the possibility of deviating from the collective agreement in certain situations, IG Metall has always demonstrated responsible action. No company has ever gone bankrupt because of IG Metall. Because we also have a strong interest in ensuring that machinery construction operates as a stable employment engine. But we will not solve the problem with wage restraint.
We will not solve the problem with wage restraint.
Jürgen Kerner
The competitive position of German companies is currently rather poor. To what extent do you see high wage demands as a productivity whip, as it was called in the past? Because high wages also increase the pressure for automation, the use of robots, and AI.
Our good wages in Germany can only be sustained in the long term if we have highly productive and highly innovative companies. The fact that German industry is so productive fundamentally has something to do with the fact that trade unions have kept wage pressure high. And yes, we also need to continue driving technology. IG Metall has never been against the use of robots in manufacturing or against AI. Especially in machinery construction, we need a technological renaissance, as modernisation has somewhat stalled after Covid, while companies in China have indeed modernised.
We want to work closely with the industry and politics to ensure that the right framework conditions are set.
Have you seen this?
In China, there are more and more new factories opening that are now 100% equipped with Chinese machines. In the past, these factories were traditionally equipped with German products. Modernisation is essential for our location. Research, development, and sustainability must again become the goal in German machinery manufacturing. Here, we want to work closely with the industry and politics, to ensure that the right framework conditions are set.
The employers' association Gesamtmetall warns that it was not only high innovative ability that made German industry strong, but also the „enormous willingness to perform“. Everyone must reflect on this again. Is there a lack of willingness to perform in the industry?
No, no. The complaint of the employers reveals an attitude that we thought had been overcome. As if more working hours, and more flexibility from employees alone, could make companies successful again. In fact, our employees are accumulating millions of overtime hours. There is almost no employee in the industry who rigidly and inflexibly works 35 hours a week. We are highly flexible – for example, with working time accounts in the industrial sector. And even in the office and other areas, people have flexible hours. In America, the promised land, there are usually no working time accounts.
So the flexibility demanded by employers is already in place?
Yes, absolutely. Both in large industrial companies and in small and medium-sized enterprises, there are many flexible solutions, because work is very order-based. We are more flexible than the Gesamtmetall association portrays. They seem to want to establish a counter-position to our collective bargaining demands. Also, the complaint about young people not being as willing to perform seems presumptuous to me. The commitment of employees remains strong across all age groups. There are other levers that need to be adjusted.
We must quickly position ourselves again as technology and innovation drivers.
Where exactly?
We used to be the equipment supplier to the world, with a strong automotive base in Germany. Now we are realising that other countries, like China, are trying to take over this position. We must accelerate the process and regain our position as technology and innovation leaders as quickly as possible. A prerequisite is that the current uncertainty needs to be alleviated. This includes, in my view, a responsible collective bargaining round and more investments for modernisation. The machinery sector must become fit for the next 5 to 10 years with new technologies.
How big is the danger of deindustrialisation in Germany?
Over the years, there has already been a gradual decline in industrial production. Although we are still well above the level of comparable countries like France, England, or the US. We must ensure that the high industrial share does not fall below a critical threshold. Well-paid jobs in this sector are also important for the stability of our democracy. It is crucial that the industrial ecosystem in these sectors is maintained. Otherwise, the decline will be unstoppable.
Where is the tipping point?
Machinery manufacturing is of course heavily dependent on how the automotive industry in Germany develops. As for other sectors, the federal government should ensure that the German machinery sector also benefits from the subsidised establishment of semiconductor plants or battery factories. Otherwise, we will end up with Chinese manufacturing using Chinese machines.
We must prove that digitization, AI, and climate protection are not in conflict with industry.
Jürgen Kerner
Then, German machinery makers clearly must be competitive. What role do energy costs play in this?
A very significant role. If we allow parts of the industry to have no prospects because energy costs are too high, it is dangerous. It would be a mistake to let those with high energy needs go, while wanting to keep those with lower energy needs, as some economists argue. The networks and industrial clusters are the strength of our industrial location. We must demonstrate that digitization, AI, and climate protection are not in conflict with industry. However, if we experience another two years of political standstill, we will continue to lose industrial jobs across all sectors. Therefore, urgency is required.
I hope that this fetish about the „Black Zero“ ends
Jürgen Kerner
What should politics tackle urgently this autumn to prevent the worst?
First, we need relief for energy-intensive industries. Whether it is the industrial electricity price, the bridge electricity price, or whether we first remove the network fees, I don't really care. But this signal must come now. We must also succeed in quickly establishing leading green markets. This applies to green steel as well as electric cars or electric trucks. We must think this through clearly, as only then will investments be made, and we will have perspectives for the machinery makers. And the third point: research and development must be further advanced. I would also hope that this fetish about the black zero ends. Every reasonable politician in Berlin confirms that we either need a special fund or a reform of the debt brake to advance our innovative capacity.
The employers from VDMA are against an industrial electricity price and for an extension of working hours. Do you actually communicate with each other?
Of course, there is an exchange, even across association borders. We and the BDI have spearheaded the Future of Industry alliance. And the BDI stands behind the Verband Deutscher Maschinen-und Anlagenbau. The BDI has also clearly positioned itself on the issue of special funds and energy costs. Regarding the industrial electricity price, I believe that the VDMA is not always aware that with such statements, we also lose jobs, sectors, and companies that could be potential clients for the German machinery and plant engineering sector.
Focusing solely on margin optimisation is the wrong approach.
Another problem in the industry is the shortage of skilled workers. This is regularly lamented, yet there are also increasing layoffs. How does that fit together?
I consider the current layoffs to be absolutely shortsighted – especially in light of the skilled labour shortage. How are we supposed to attract young people to the industry if jobs are no longer seen as secure? In my view, companies are reverting to old mechanisms because they are losing faith that they can transition to new business models towards AI, climate neutrality, and circular economy. If that happens, we will soon lose our status as an industrial nation. Therefore, I urge business leaders to work towards a more compelling vision. This vision must be tangible and concrete – for management, employees, and the public. Focusing solely on margin optimisation is the wrong approach.
Does corporate austerity scare off young people?
Yes, definitely. When young people notice this, they look elsewhere and move to different industries. Hence, the industry must prove to itself that it can manage the structural change without immediately resorting to layoffs. There’s also short-time work available. In our collective agreements, we have the option to reduce working hours and thus wages. There are also flexible solutions, such as at Continental in Lower Saxony, where employees can be directly placed with Rheinmetall or Siemens Mobility, completely avoiding complex transfer companies. It’s also very unconvincing when employers lament the lack of skilled workers in speeches, demand longer working hours and longer working lives, and then immediately lay off people at the first sign of trouble.
What must companies do to fill open apprenticeships?
Companies need to present themselves differently today than in the past, when there were many applicants for a single position. Now, employers must proactively reach out to potential candidates and clearly communicate what makes an apprenticeship with them attractive. The shortage of trainees is also the reason why we demand a significant increase in apprenticeship salaries. The metal and electrical industries used to be leaders in this regard, but that is no longer the case. One of the successful models in this context is the dual study programme, which we need to anchor more firmly in medium-sized businesses alongside traditional training.
There’s also another pool of potential trainees: migrants. Why is it not possible to integrate them quickly into the labor market?
We simply need a functioning state again, where bureaucracy works and that proves its ability to act in crisis situations. Therefore, we don’t need stronger or better laws, as has been demanded again, but the existing laws need to be enforced. This applies to the recognition of qualifications as well. I hear about foreign authorities with a backlog of thousands of unanswered emails. People cannot enter the workforce simply because the administration is not functioning and there is insufficient staff at key positions. Integration primarily occurs through work because it provides a perspective. This is particularly crucial for young refugees.
The social climate is threatening to deteriorate for migrants in some regions of Germany – and thus also the opportunity to recruit the necessary skilled workers. How can one politically counteract this?
Migration and security are topics that concern people. Politics must take this seriously while also creating opportunities for refugees. This will also free up space for issues that I consider even more important: the future of the industrial location. We, as IG Metall, will do everything next year to ensure that the Bundestag election campaign focuses on this crucial future question.
We must not allow extreme parties to destroy our democracy.
Should German business leaders position themselves more strongly in the migration debate? After all, this is also about filling vacancies in the labour market.
Yes, I believe that companies must take a stand on such fundamental social issues. This is already happening. This year, many companies – both large and small – have positioned themselves more clearly than ever before following the large societal demonstrations. I see this as very positive, because we must not allow our democracy, with all its flaws, to be destroyed by extreme parties.