Metal Workers Get a 2.8% Raise

Always first to negotiate the new sectoral wages, metal workers are a bellwether for economy-wide wage negotiations in Austria.

They faced each other with iron determination. For eleven hours, employers and employees of the metal sector sat down on October 28 before they announced an agreement, just in the nick before midnight.

The 130,000 employees in the sector – including companies like steelmaker Voestalpine to car parts supplier Magna – will get an average pay raise of 2.8%. The leaders of the unions, Rainer Wimmer and Karl Dürtscher, described the deal as bringing home “everything that was attainable.”

Employees secured a new minimum wage of €2,000 in the sector – significantly above the Austrian-wide minimum wage of €1,500 – which is seen as strong signal for other industries whose wage negotiations are soon to follow. In fact, the average increase of 2.8% is also decent, even if not spectacular. With inflation running at 1.8%, metal workers will get a 1% increase in real income, very close to the annual rise in productivity in the wider economy.

The magic Benya formula

This, then, is an almost perfect illustration of the Benya formula in action. Austrian trade unionist Anton Benya (1912-2001) formulated in the 1960s that wage increases should equal the inflation rate plus medium term increases in productivity. The formula worked exceedingly well in the following decades for both raising the purchasing power of large swathes of the population (and with it, domestic demand), while also allowing companies to stay internationally competitive. While Austria experienced higher inflation in the 1970s, but never an inflation spiral like other countries.

In the 1990s, the formula was weakened with the argument that “globalization’s pressure” would necessitate a bigger share for companies. The share of wages in national income accordingly fell from 76% to 68%, while the share of dividends doubled to 10%. More than emerging markets, though, it was pressure from Germany and Netherlands – which had both practiced extreme pay restraint in the 2000s, and competed directly with Austrian companies in many key sectors –, which led to this new situation.

In the last decade, however, the Benya formula has come back in fashion and wage deals have been broadly in line with it – the metal workers saw their pay rise by an average of 2.46% in the last seven years, closely reflecting the inflation rate and rising productivity.

It remains to be seen if other sectors with often less specialized workers can repeat this feat, such as breweries and retail, whose sectoral wages are being negotiated right now. Perhaps a round of beer for everybody will help to clinch a fair deal?

Benjamin Wolf
Benjamin studied Journalism, History and International Affairs. After stints with Cafébabel in Paris and Arte in Strasbourg, he is now working as managing editor and COO for Metropole in Vienna. Fields of expertise are politics, economics, culture, and history.Photo: Visual Hub

Help us help you

“Strong media and independent journalism are built on the shoulders of subscribers. Your support means the world to us.

Benjamin Wolf
COO & Managing Editor

The coronavirus outbreak affects and challenges your life in big and small ways. Metropole is here for you and we are proud to be your news source during this crisis.

But just as the coronavirus has increased the need for independent journalism, it has also undercut a major revenue source of media companies, ours included – advertising.

We need your support to keep it up – donate or subscribe and #helpushelpyou!

Support Metropole!


 

RECENT Articles

Vienna’s Ultimate Swimming Pool Guide

It will be a summer like no other. This year due to corona, many Viennese will opt to spend a good part of their holiday in the city and surroundings. Lucky for us, there are few better places for relaxing in the shade and swim in pools or rivers than Vienna.

The Coronavirus in Austria & Vienna | School Vacations Started

With summer approaching, new challenges await Austria in dealing with the coronavirus. Here’s all you need to know about current measures and developments, including trusted sources and tips – regularly updated.

Liberal Freedom and Its Flip Side

The renewed struggle against discrimination is really two struggles: one about rights, the other about opinion.

Taste of India | Keep Calm and Curry On

Nestled in the 3rd district, The Taste of India’s second location serves authentic North Indian cuisine in a cozy atmosphere, balancing food and feeling.

Traditional Brand Icons and the New Sensitivities of Race

The worldwide Black Lives Matter (BLM) movement has now spilled over onto the supermarket shelves. A look at Austria’s own racially problematic icons.

Grey Wolves Howl in Favoriten

Turkish political violence has spilled over on to the streets of Vienna: The hard right Grey Wolves confront an alliance of Kurdish and left wing protesters in the 10th District.
 

METROPOLE NEWSLETTER

Join over 5,000 Metropolitans, who already get monthly news updates and event invitations.