The metal technology industry has been suffering from the recession since last summer. Many employees will also feel the consequences of the poor economic situation: around 32,000 affected people will receive a lower pay increase than is usually provided for in the collective labor agreement.
The bad situation will probably continue this year, according to an economic study by Wifo on behalf of the trade association (FMTI). Now about 120 companies with about 32,000 employees will apply the so-called competition and labor protection clause. Companies that compete internationally and have a high share of personnel costs can therefore reduce the agreed CO increases to seven or 8.5 percent.
Chairman of the trade association signals ‘structural demand crisis’
All fears that employers had expressed before the start of the KV negotiations have come true, trade association chairman Christian Knill complained on Wednesday: “We are in a structural demand crisis.” The 120 companies that want to apply the clause according to the latest state of affairs are loud FMTI “largely SMEs with fewer than 500 employees”. Appropriate solutions will be negotiated at company level at the end of February.
Details will be finalized by the end of February
Now around one in ten of the sector’s 1,200 companies rely on the competition protection clause. At company level, the specific design of the clause will now be agreed in detail for approximately 32,000 of the approximately 137,000 employees in the metal technology industry at the end of February. “This gives companies more flexibility to respond better to the competitive situation at hand. For employees, this means more operational control, job security and understanding for the specific situation of their company,” says Knill.
A third company expects further declines
As for the current situation, Wifo’s economic test shows that according to FMTI, production has continued to decline over the past three months. The pace of decline has accelerated. 43 percent of companies reported that production fell in the last quarter of 2023, and about 36 percent reported this in October 2023. In the metal goods industry, production is falling even more sharply than in mechanical engineering. The production outlook also remains negative. Nearly a third of companies expected a further decline in the next three months, and less than a tenth expected an increase in production.
Since mid-2022, there has been a steady downward trend in incoming orders in the metal technology sector. Almost half of the companies describe their order book as “not sufficient”. That is why “the bottom of the recession has not yet been reached”.
Knill: Brache faces “poisonous cocktail”.
The international preconditions are also difficult. The industry earns about 8 in 10 euros from exports – and the most important export market, Germany, is also experiencing a recession. Moreover, domestic competitiveness is weakened by higher inflation in this country. Just this Wednesday, the Austrian Statistical Office pointed out that annual inflation for 2023 was 7.8 percent and that inflation fell more sharply in almost all eurozone countries last year than in this country. Energy costs also pose a special burden on local businesses. “This is a toxic cocktail that the industry currently has to swallow,” Knill said.
To compensate for these competitive disadvantages as best as possible, such a competition and labor protection clause exists for the first time. Companies with a high share of personnel costs can even reduce the agreed CO increase by a maximum of 3 percent. The clause applies depending on the personnel costs and business success of the company in question.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
