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

${\ displaystyle {\ text {load in}} \% = {\ frac {{\ text {actual percentage increase}} \ cdot {\ text {real runtime}}} {\ text {real runtime + (real runtime - 12 )}}}}$

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

${\ displaystyle {\ text {load in}} \% = {\ frac {\ text {actual percentage increase}} {\ text {real running time}}} \ cdot 12}$

Sample calculation

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

More accurate formula

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

Simplified formula

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