Westrick formula

With the Westrick formula , collective agreements with different terms can be compared.

history

Ludger Westrick , former State Secretary in the Federal Ministry of Economics , developed (in 1963 on the occasion of a metal wage round ) a (simplifying) formula for collective agreements with a term of more than 12 months. If the term is longer than one year, the question of the medium-term real burden for the company regularly arises.

formula

The formula assumes that tariffs are usually concluded for one year, but if they are longer, this results in long-term savings. The long-term real exposure is then calculated as well

${\displaystyle {\text{Belastung in }}\%={\frac {{\text{tatsächliche prozentuale Erhöhung}}\cdot {\text{reale Laufzeit}}}{\text{reale Laufzeit + (reale Laufzeit - 12)}}}}$

Sometimes you will also find a simplified, but somewhat imprecise formula:

${\displaystyle {\text{Belastung in }}\%={\frac {\text{tatsächliche prozentuale Erhöhung}}{\text{reale Laufzeit}}}\cdot 12}$

Sample calculation

Given is a tariff increase of 3% to 18 months.

More accurate formula

${\displaystyle {\text{Belastung in }}\%={\frac {3\cdot 18}{18+(18-12)}}=2{,}25\,\%}$

Simplified formula

${\displaystyle {\text{Belastung in }}\%={\frac {3}{18}}\cdot 12=2{,}0\,\%}$