39 metal technology companies in Upper Austria: Employees receive less than stipulated in the KV qualification

In Upper Austria there are 39 companies in the metal technology industry that apply the so-called competition protection clause, which – as agreed by the social partners – enables a slightly lower increase in wages than is generally provided for in the collective agreement. Across Austria, 32,000 metal workers (out of 140,000) are now affected by this KV exception.

Neither the trade association nor the ProGe union wanted to publish how many employees this affected in Upper Austria and which companies they were. However, Michael Seemayer, regional chairman of ProGe in Upper Austria, told the OÖN that two thirds of these companies had a works council. The employer must negotiate with this or with the union (if no works council is installed) by the end of February in which form the difference between the lower salary and the KV agreement will be “paid” to the employees.

Time credit or one-off payment

This can be in the form of time credits, a reduction in working hours, social benefits or a one-off payment are also possible if the workforce agrees. “Deleting the difference without replacement is out of the question,” emphasized Seemayer.

In view of the difficult situation, the trade union and the employers anchored the competition and employment protection clause in the collective agreement. This enables companies that compete internationally and have a high proportion of personnel costs to reduce the agreed KV increases to seven or 8.5 percent.

According to the FMTI, the 120 companies that want to apply the clause according to the latest status are “for the most part SMEs with fewer than 500 employees”. That corresponds to a tenth of the industry. “We expected that,” said a spokesman for the industry association FMTI to the OÖN. In Upper Austria there are companies “of all sizes,” says Seemayer. Most of the companies that want to apply the clause would increase by 8.5 percent, a few by seven.

Agreement is valid for two years

The agreement provides – without applying the possible clause – for an average increase in wages and salaries of 8.6 percent gross. Through a sliding scale, lower income earners receive ten percent more. The agreement is valid for two years, with one percent added to rolling inflation in the second year.

The underlying formula calculates the personnel costs measured by the gross value added (sum of personnel costs, depreciation and profit). Depending on the amount of the calculated value, the actual increase (10 percent, capped at 400 euros) is reduced in two stages to either 8.5 percent (340 euros cap) or 7 percent (280 euros cap).

All fears that employers mentioned before the start of the KV negotiations had come true, complained trade association chairman Christian Knill in a broadcast on Wednesday. “The recession is taking hold in the industry,” said the entrepreneur (Knill Group). “We are in a structural demand crisis.”

Production has recently fallen further

Regarding the current situation, the Wifo economic test shows, according to FMTI, that production has continued to fall over the past three months. The pace of decline has accelerated. 43 percent of companies reported that production fell in the final quarter of 2023, and around 36 percent reported this in October 2023. In the metal goods industry, production is falling even more sharply than in mechanical engineering. The production prospects also remain negative. Almost a third of companies expected further declines in the next three months, and not even a tenth expected an increase in production.

There has been a steady downward trend in incoming orders in the metal technology industry since mid-2022. Almost half of the companies describe their order backlog as “not sufficient”. Therefore, “the bottom of the downturn has not yet been reached”.

International conditions difficult

The international framework conditions are also difficult. The industry earns around 8 out of 10 euros from exports – and the most important export market, Germany, is also experiencing a recession. In addition, domestic competitiveness is being weakened by the higher inflation in this country. Just this Wednesday, Statistics Austria pointed out that annual inflation for 2023 amounted to 7.8 percent and that inflation fell more sharply in almost all countries in the Eurozone last year than in this country. Energy costs are also a particular burden on local businesses. “This is a toxic cocktail that the industry is currently having to swallow,” commented Knill.

In order to compensate for these competitive disadvantages as best as possible, there is such a competition and employment protection clause for the first time. Companies with a high proportion of personnel costs can actually reduce the agreed KV increase by up to 3 percent. The clause applies depending on the personnel costs and the operating success of the respective company.