Collective Bargaining

The Employers’ Association of Insurance Companies in Germany (AGV) leads, on behalf of its member companies, all collective bargaining with the unions (ver.di, DHV and DBV).  Branch-wide collective agreements for the private insurance industry are the focus of negotiations. These are divided as follows:

  • The salary collective agreement contains provisions on salary levels.
  • The so-called general working conditions are regulated by the framework agreement. These include e.g. the length and positioning of working hours, breaks, vacation, termination notice conditions or also holiday pay and negotiated extra payments, e.g. Christmas money. Additionally, provisions on the classification of wage groups and the criteria for the granting of additional benefits are found here.
  • The special collective agreements for the insurance industry cover the topics of partial phased retirement, deferred compensation and protection from rationalisation and wealth formation.

Phase One: Termination of Collective Agreement

First, one of the two social partners (employers’ association or union) gives proper notice to terminate the collective agreement. The unions submit their demands to the employers and usually inform the press at the same time. They explain their demands, make their objectives clear and give reasons why these demands are considered achievable. The employers in turn formulate their corresponding counterclaims and inform the unions and, where appropriate, the public of the situation and the framework conditions in the industry.

Phase two: Exchange of economic and business data

The economic and business framework conditions are presented in the first or second round of collective negotiations. To support their position, each side presents the relevant benchmark data from their perspective. Additionally, recommendations from business institutes and/or experts are discussed. The companies’ profitability and competitive positions are focal points for the discussion as are the business development forecasts and the employees' pay situation. Collective agreements concluded in other branches may also play a decisive role.

Phase three: Tough negotiations

Following the exchange of their respective positions, the often protracted negotiations on a compromise between both parties begin. In these negotiations each party attempts to convince the other bargaining party of the correctness and importance of its arguments.

The members of the bargaining committee generally enter negotiations with clearly defined mandates. The committee does not deviate from these mandates without further internal discussion. If at an advanced stage of the negotiatons further guidance is needed on specific issues, such as the evaluation of certain employee functions or the effects of new technologies, then expert committees or individual specialists may be consulted. Special issues may also be discussed independently by an expert committee.

If the negotiations are deadlocked and it appears that no party is prepared to deviate even slightly from its position, it can be helpful and even necessary to set new dates for negotiations. Consequently there are sometimes a number of negotiating rounds.

Phase four: The result – a compromise

Where a compromise acceptable to both sides is found, the text of the agreement is drafted and the document signed. Finally, the employers’ association and the unions inform their respective members and the general public about the concluded collective agreement.

Arbitration and labour disputes

Although all possibilities should first be exhausted, sometimes the bargaining parties cannot reach an agreement through open negotiations. In this case the parties may decide to proceed to arbitration.

The German insurance sector had had an arbitration agreement until 30 June 1980 when it was terminated by the unions. It was not renewed since then because both bargaining parties decided that it would be better to conclude reasonable wage settlements between themselves – without an arbitrator.

Industrial action (strike or lockout) is another method for unions to pursue their interests. Up until now, however, trade disputes in the German insurance industry have been resolved amicably in contrast to many other sectors.