Germany's metal and electrical industry is heading into its most consequential wage round in years with the two sides starting from fundamentally different realities. IG Metall, the country's largest industrial union, is demanding at least real-wage protection for the 3.7 million workers covered by the sectoral agreements. Its own survey of 267,000 members shows a relative majority of 47.8 percent back "moderate" pay increases, while 35 percent want a "kräftige", strong, rise. The employers' association Gesamtmetall, meanwhile, reports that only 19 percent of member companies consider their financial situation good, and every fourth firm is operating at a loss.

Union frames demand as defence against deindustrialisation

Christiane Benner, IG Metall's chair, dismissed any talk of wage restraint. "Verzicht bringt nichts," she said, waiver brings nothing. She argued that companies and politicians share responsibility for keeping industrial jobs in Germany and preventing deindustrialisation. Labour costs, she noted, account for only a small share of total costs. The union's strategy links pay demands to an "anti-dumping strategy" and local-content requirements to protect value creation. Where firms face genuine difficulties, Benner said the union is ready to talk, but only in exchange for investment commitments, product guarantees and job security.

The union's survey also reveals a split in how workers perceive their own employers. Just under half, 31.7 percent plus 14.5 percent, describe their company's situation as good or very good. Roughly one in five see it as bad or very bad. Aerospace, defence, shipbuilding and energy firms are doing well, the union said, while the automotive sector and service providers are under pressure.

Employers paint a darker picture

Gesamtmetall rejects the union's reading. Its own survey finds only 19 percent of M+E companies rate their economic situation as good. A quarter are loss-making. The association warns that deindustrialisation and job losses are already underway, and that ignoring this reality will not change it. The shared goal of both sides, it argues, must be lowering costs to save the German industrial base. The divergence is not merely rhetorical: it defines the bargaining space. If employers believe they are fighting for survival while workers expect real-wage gains, the gap is structural, not cyclical.

Sectoral divergence complicates a single agreement

The metal and electrical sector is not a monolith. The collective agreements cover mechanical engineering, metal processing, electrical engineering and other vehicle construction alongside the automotive core. Some sub-sectors, defence, aerospace, shipbuilding, energy, are benefiting from rearmament and energy transition spending. Others, particularly automotive suppliers, are contending with the electric transition, Chinese competition and weak demand. A single percentage increase applied across this spectrum will inevitably fit some firms poorly. That tension has always existed, but the current spread between winners and losers is wider than in previous rounds.

The 35-hour week becomes a flashpoint

Benner singled out Mercedes-Benz for warning against challenging union achievements that are not even on the negotiating table. "The 35-hour week and the eight-hour day belong to the identity core of our union," she said. "We fought for them; they were not gifted to us. And we will continue to fight for them." Moving to a 40-hour week without pay compensation would amount to a 14 percent wage cut, she calculated. The intervention signals that IG Metall expects some employers to use the difficult environment to reopen settled issues, a tactic the union is determined to block.

Volkswagen sits outside the frame

Notably absent from this round is Volkswagen, Germany's largest industrial employer. The Wolfsburg group operates under a separate house agreement that expires at the end of 2026. That agreement has been the site of intense conflict over plant closures and cost cuts. Its exclusion means the sectoral deal will not directly constrain or enable VW's internal negotiations, but the outcome will set a benchmark. If IG Metall secures a strong increase here, VW's works council will cite it. If the union settles for less, management will.

Timeline leaves little room for manoeuvre

The procedural calendar is tight. IG Metall's national board will finalise the pay demand on 23 September after consulting regional tariff commissions. First talks with employer associations begin on 7 October. The current agreements lapse on 31 October. Crucially, the parties agreed to forgo a nachlaufende Friedenspflicht, a post-expiry peace clause, meaning warning strikes can legally begin on 1 November. That removes the usual buffer period and raises the probability of industrial action before Christmas. Both sides know the calendar; neither has an incentive to move early.

People mentioned

Organisations

IG Metall · Gesamtmetall · Mercedes-Benz · Volkswagen