Chemical Industry Reaches Wage Agreement with New Measures to Safeguard Jobs

The chemical sector in Germany has finalized a new collective bargaining agreement aimed at stabilizing employment amid ongoing industry challenges. The recent negotiations between trade unions and employer associations resulted in a wage freeze for the current year, with plans for modest salary increases to take effect from 2027 onward. The agreement, which will remain valid until the end of May 2028, introduces several initiatives designed to protect jobs and enhance workforce resilience.

Currently, the chemical industry is experiencing its lowest production levels in two decades, with operating rates hovering around 70 percent. Productivity across the sector has dropped approximately 20 percent compared to 2018 figures. A recent survey conducted by the central chemical industry association revealed that around 20 percent of companies are considering relocating or even shutting down production facilities. Geopolitical tensions, particularly the ongoing conflict in Iran, have further exacerbated the situation, adding to the economic strain faced by the industry.

Estimates from the key workers' union indicate that up to 50,000 jobs could be at risk. During the recent bargaining rounds, union representatives advocated for wage increases to protect real incomes for roughly 585,000 employees in the sector. However, the challenging economic climate led to a compromise, with unions agreeing to a wage freeze for the current year. Salary adjustments have been scheduled to begin in January 2027, with a 2.1 percent increase, followed by a further 2.4 percent rise in 2028.

Employers have expressed that the extended duration of the agreement offers much-needed planning certainty, allowing companies to better navigate the persistent downturn. The new collective bargaining framework also introduces a transformation-oriented agreement, marking a significant shift in labor relations within the industry. This approach is designed to provide companies with greater flexibility while ensuring that employees receive support during periods of transition.

A key component of the agreement involves the expansion of the existing company demographic fund, which was originally established in 2010. Under the new terms, resources from this fund can now be allocated not only to retirement provisions but also to initiatives aimed at securing jobs. These measures include investments in employee training, the expansion of apprenticeship programs, and personalized coaching to help workers adapt to changing industry demands. The allocation of these resources will be tailored to the specific needs of each company.

To further bolster employment security, employers have committed to making additional annual contributions to the demographic fund for the years 2026 and 2027. Each employee will receive an extra 300 euros per year, while apprentices will be allocated 150 euros annually. Over the course of the agreement, the industry will invest more than 350 million euros in measures designed to retain and develop positions that may be at risk due to structural changes.

Industry representatives emphasized that the new agreement ensures that companies can no longer claim there are no alternatives to workforce reductions. By providing targeted investments in skills development and job retention, the sector aims to mitigate the risk of layoffs and support employees through the current period of economic uncertainty.

The demographic fund, which has historically focused on retirement savings, has increasingly shifted toward supporting reduced working hours and other measures to accommodate changing workforce needs. Previous wage agreements in the sector included salary increases in 2024 and 2025, but the anticipated economic recovery did not materialize. The ongoing threat of higher energy prices now poses additional challenges for the chemical industry, potentially undermining the fragile signs of improvement observed earlier this year.

Overall, the new collective agreement reflects a strategic effort by labor and management to address the sector's most pressing issues, with a clear emphasis on employment protection and adaptability in the face of ongoing uncertainty.