Business Waiver of holiday pay: No strikes: tariff agreement at...

Waiver of holiday pay: No strikes: tariff agreement at Galeria Karstadt Kaufhof

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The danger of further strikes at the department store chain Galeria Karstadt Kaufhof before Christmas and between the years has been averted.

The company and the Verdi union agreed on a restructuring agreement for the company's almost 26,000 employees, as both sides reported.

It is intended to create a uniform tariff structure in the merged group and to facilitate restructuring. The collective bargaining agreement is particularly detrimental to Kaufhof employees. Karstadt employees, who have been paid much less so far, can look forward to a little more money.

Despite all the concessions: For the Verdi union, the positive prevails in the wage agreement. "We have agreed comprehensive site and job security for the next five years and a binding and full return to the collective bargaining agreements for retailers from January 2025," said Verdi federal board member Stefanie Benefberger, who welcomed the agreement, which was preceded by protracted negotiations and warning strikes by Kaufhof employees were.

The Karstadt-Kaufhof labor director Miguel Müllenbach emphasized that the agreement would now give the company "planning security for the next few years". Chief executive Stephan Fanderl praised above all that the agreement also creates scope for performance-related remuneration components. Karstadt has had good experiences with that.

The negotiations had been under great time pressure. Because in January Kaufhof is to be merged with Karstadt. Without a wage agreement, this would have resulted in a drop in wages of around 11 percent for Kaufhof employees, according to Verdi, because of the restructuring agreement that Karstadt had agreed upon some time ago.

The wage agreement now provides for cuts for Kaufhof employees, but they are not quite as serious. Employees must waive holiday and Christmas bonuses for the term of the collective agreement until 2025, but the monthly wages remain unchanged.

The new agreement, on the other hand, brings Karstadt employees a significant improvement over the restructuring agreement that was previously in force in the company. Because their wages and salaries increase by around 11 percent to the level of remuneration of Kaufhof employees.

The new collective agreement is to apply until 2025 and, at the same time, sets out the first steps on the way to returning the department store group to the normal retail tariff level. In the years from 2012 to 2024, the wages of employees are expected to rise faster than the collective bargaining agreements in the retail sector.

In addition, according to Verdi, the collective agreement includes securing locations for all branches – including double and multiple locations – until the end of 2024, as well as an employment guarantee for the same period. Investment commitments totaling at least EUR 700 million by September 2020 and the waiver of profits until the end of the term of the collective agreement were also laid down.

Galeria Kaufhof is still struggling with red numbers. CEO Fanderl reported only this week in an interview with the "Handelsblatt" that Karstadt alone will "make a one-time loss of around EUR 78 million this year". He put Kaufhof's cumulative loss from the past four years at 600 million euros.

But Fanderl is currently working on many screws to get the group back on track. Synergies from the merger of Kaufhof and Karstadt should save around 380 million euros by 2022. At the same time, the manager is expanding important pillars such as the sports business or travel agency through takeovers. Galeria Karstadt Kaufhof secured 106 travel agencies and the German online platform of the bankrupt tourism giant Thomas Cook. In the sports sector, the takeover of Sport Scheck should provide additional impetus.

Fanderl already has the return of the department store giant in the black. "By 2023, we will achieve a return on sales of two to three percent," he recently promised.

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