Changing Demographics in the European Chemical Industry

17.07.2012 -

Silver Generation - European chemical industry employees are among the world's best paid and additionally enjoy social benefits their counterparts on the other side of the Atlantic can only dream of. What's more, says the European Industrial Relations Institute EIRO, they also command higher pay than workers in almost all other branches of industry.

The best place to be employed by a chemical producer appears to be Belgium, the worst Poland. Calculated at euro exchange rates prevailing in 2010, statistics published by the German chemical employers association BAVC, Belgian chemical workers were by far the most expensive that year, as they have been for many years. Chemical producers in one of Europe's smallest countries shelled out an average of €56.96 per hour, about 7% more than in 2008. Those working for large companies in large production centers such as Antwerp undoubtedly earned more.

Dutch chemical companies had the second highest hourly wage bill in 2010, averaging €45.83, some 3.7% above the 2008 benchmark. Pooling figures for west and east, Germany was the third most expensive place to do chemical business. The figures are not entirely comparable, however, as wages and benefits for employees in the old Federal Republic in the west and the former German Democratic Republic in the east diverge, and a larger share of production facilities are located in the west.

Chemical workers in western Germany cost their employers €46.49 per hour in 2010, some 3.5% more than in 2008. The pay envelope in eastern Germany was nearly 6% fatter than in 2008 but the hourly tally was only €31.36. French workers cost €44.66%, some 4% more than two years earlier.

By comparison, the 2010 wage total for chemical workers in the United States was the dollar equivalent of €34.99, only slightly more than in eastern Germany and lower than the bill in 10 European countries. In Japan, where hourly wage costs averaged €37.31, pay lagged Sweden, Denmark, Austria and Ireland. Japanese workers nevertheless cost employers less than in Finland, Italy, Spain, the Czech Republic, Hungary, Slovakia and Poland, where chemical company workforces cost only €8.63.

While European statistics show that in most countries chemical industry wages increased over the two-year period, this was not true for the UK (where pay levels sank 2.3%), Hungary (6%) and 5.7%.and Poland. The decline in UK hourly wages to €26.05 from €26.65 a year earlier may be chalked up to exchange rate fluctuations but clearly in this country in which chemical production -- as well as manufacturing in general -- has been pointing downward for some time industry did see any wage growth.

Of course, the bare numbers reveal neither how much cash employees actually take home nor do they take into account what non-monetary benefits they may enjoy. EIRO says the wage totals in Belgium are inflated by social benefits more generous than those received by employees in other European countries and certainly the U.S.

Shrinking labor pool demands a new approach

Shifting demographics could make the European chemical industry an even more favorable place to work. As the population ages, chemical employers will find their labor pool shrinking. But despite the laws of supply and demand, with economic crises looming at every turn, putting more money into workers' pockets may not always be possible so flexible solutions will have to be found.

Another matter that will have to be considered is that older workers will require more attention. As early retirement soon will no longer be an option, they will have to remain healthy enough to continue on the job until retirement age -- which in some countries has been raised to 67 -- and their employers will be called on the help make this possible.

A new contract on wage and working conditions recently signed by Germany's chemical trade union IG BCE and the employers' association BAVC could help pave the way for changes that would secure the future for companies throughout Europe. This especially as it provides for lifelong work accounts that combine phases of normal activity with periods of inactivity such as sabbaticals.

The 2011 collective agreement for the 30,000 chemical workers in eastern Germany was novel in that it married a linear wage increase of 15% up to 2015 with improved work flexibility for older employees and those with expanded family responsibilities such as caring for small children or elderly parents. Under the terms, shift workers over 60 were given the right to work four-day weeks at 95% of previous pay and under certain circumstances to halve working hours for pay equivalent to 80% of full-time.

Germany improves flexibility

The union-employers contract agreed in late May for western Germany builds on many of the demographic components agreed last year for the east. In addition to this, workers in the west received a linear pay increase of 4.5% covering a period of 19 months. This will be implemented in all geographical regions up to September. Also under the new contract, the length of the work week has been officially established at 37.5 hours. It will be left to individual businesses to determine how this should be organized. Instead of overtime pay for work exceeding 37.5 hours, employees generally will be given time off but in some cases will be eligible for monetary compensation.

The new contract provisions undoubtedly will help sweeten the pill for those who would prefer to retire early as German chemical workers have been doing for decades (in such great numbers that the proportion of workers over 60 still on the job is currently negligible). Under the current rules, that the new terms will simply complement for now, shift workers over 55 and others over 57 could reduce their working hours.

To help pay for the new conditions, German chemical companies have pledged to annually invest a further €200 per employee in an existing demographics fund, topping up the €312 already being spent under a 2009 scheme. A long with making it easier to retain a qualified force of older workers, the companies have pledged to uphold the already high level of qualification for young people entering the workforce.

In Germany, both union and employers, are pleased with their latest joint effort. IG BCE's chief negotiator, Peter Hausmann, called the agreement "a new milestone on the path toward a working world suitable for older employees." Terming the revamped rules for life employment accounts an "intelligent" move, his counterpart at BAVC, Hans-Carsten Hansen, said the improved flexibility also will benefit employers as their workers will stay on the job longer.

It remains to be seen whether the new German rules could serve as a model for other countries or whether labor and capital would so willingly cooperate. In Germany the two sides have traditionally enjoyed amicable relations -- amicable relations -- there has been no strike in the industry since 1971.