REDUCING PRECARIOUS WORK IN EUROPE
THROUGH SOCIAL DIALOGUE
THE CASE OF GERMANY
OKT 2016, DUISBURG MEETING
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In a nutshell…
o Labour markets: Strong employment growth after 2009 +
income inequality and LM segmentation ‚freezed‘ at high
levels
= Complementary relationship = new equilibrium?
= rather: ongoing transformation
o LM Regulation: Re-Regulation, but legacies of DeRegulation + exit options
 employer strategies still shaped by institutional
settings of the past
o Industrial Relations: Diverging perspective on role of
social partners
– Cross-class coalitions vs. ‚shotgun weddings‘
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Employees in non-standard jobs (in Mio.)
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Inequality of annual gross labour income
Source: Grabka 2015
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Evolution of real wages (full-time employees)
20%-percentile
Median
80%-percentile
Source: Felbermayr et al. 2014: 11
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Standard employment
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Regulation + Representation Gaps
o Hybridisation of wage setting system (minimum wage +
enhanced mechanisms to extend coll. agreements)
o Representation gap widened
– ca. 60% of employees without works council
– 34 % (West) and 45 % (East) not covered by coll.
agreement + no works council
o Strategies of trade unions + employers
– fragmentation due to craft unionism, yellow unions + singleemployer bargaining
– partly successful trade union revitalization strategies aimed
at increasing + using organisational power
– Law on tariff unity contested within trade union camp
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Enforcement gaps
o Public or collective support for enforcement of individual
employees’ rights patchy
– State inspections: don‘t request employers to pay outstanding
wages, but employees have to file claims; information
exchange between different control agencies difficult
– Trade unions: no right to file collective claims; legal advice
and counselling for members only
– Works councils: not present in majority of firms
o Self-Enforcement
– General contractor liability for minimum wages
– a few voluntary institutions set up by social partners
– Public procurement agencies partly established own control
mechanisms  Case study
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Social protection gaps
o Highest at-risk-of poverty rates among unemployed in EU
– due to ‚Hartz‘ Reforms 2003 (abolition of unemployment
assistance etc) in conjunction with low wage levels
o Low pension entitlements for low to medium earners
– Due to Riester reforms 2001ff in conjunction with low wage
levels
– minimum wage not sufficient to earn minimum pension
– second and third tier pensions highly biased towards
medium to high earners
– Trade union strategies geared towards maintaining previous
pension levels
• would benefit all, but not sufficient for low wage earners
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Case studies (1): Public Procurement in Bremen
o Gaps concerned: Regulation + Enforcement gap
o Bremen is among the few Federal States whose public
procurement law prescribes a (slightly) higher prevailing
wage for its contractors. Moreover, Bremen has established
a special agency in order to control compliance with pay
clauses.
 (How) are politics and social partners trying to sustain
public procurement as a means to promote job quality
 To what extent is the administration + social partners
able to effectively enforce higher prevailing wage level
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Case studies (2): Collective agreements in the
airport security industry
o Gaps concerned: Regulation + Representation gap
o Industry: (airport) security
o High wage increases for employees following trade unions
organizing campaigns and long industrial disputes. An
illustrative example …
– How to organize low-skilled workforce
– How to extend coverage to all employees, not just those with
high bargaining power (due to ability to inflict economic
damage on firm = empl. at screening line)
– How to cope with heterogeneity and fragmentation on
employers‘ side
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Less-than-full-time employment
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Regulatory gaps
o Regulatory gaps: law primarily determines maximum
working hours + rights to reduce working hours, but scarce
rights re. minimum hours or increasing working hours
– Example: overtime
o Minimum hours: a few coll. agreements, but problems of
enforcement
o Work on demand
– Most widespread among minijobbers (13%)
– number of hours must be fixed (+/-25%), but no lower limit
for hours
– Enforcement problems, due also to complex jurisdiction
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Representation gaps + Industrial relations
o Same indiv. + coll. rights for part-time workers, but…
– part-time work often in industries with low coverage by
collective agreements and works councils
 Enforcement gaps
– particularly strong in the case of minijobers (paid holiday,
sickness pay, equal pay)
– Statutory minimum wage = more equal pay (+less minijobs)
o Trade union strategies
– collective + company agreements often a means to reconfirm
/specify legal requirements, rather than add rights
– a few collective or company agreements try to restrict use of
minijobbers (but opening clauses for ‚voluntary minijobs‘)
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…industrial relations / Social protection gaps
o …Trade union strategies
– no particular union strategies aimed at organising
minijobbers (unlike TAW)
• Dualisation?
• Other explanation: Because they are a (large) minority within low-wage
service industry  priority of unions is to improve bad job quality for
majority of ‚core employees‘ within these industries
o Social protection gap: risk for old age income poverty even
more pronounced for part-time workers
– in particular minijobbers (no pension insurance)
– high take-up rate of subsidies for private (but not: company)
pension plans among female part-timers, but not sufficient to
reach sufficient individual pension entitlement
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Case studies (1): Marginal part time jobs in the
retail and/or hospitality industry
o Gaps concerned: Regulation + Social protection gap
o Industry: hospitality or retail
o In retail + hospitality industry, minijobs have decreased since
the introduction of minimum wage, while regular employment
has increased
– Is this an uncoordinated trend or accompanied by initiatives
from employers and employee repr. aimed at offering more
sustainable jobs?
– Do companies experience a flexibility loss due to reduced
number of minijobs – and if yes, how do they cope with it?
– Is this accompanied by a stronger flexibilisation - in terms of
distribution of hours and a stronger resort to ‘work on demand’?
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Case studies (2): Collective agreement in aviation
industry
o Gaps concerned: Regulation gap
o Industry: airport security industry
o Collective agreement entitles employees to higher volume of
contracted working hours, if average hours worked over last
12 months exceed contracted working hours substantially
– How often do employees effectively make use of this
option? Reaons for limited use
– Experiences of employers in implementing collective
agreement
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Fixed-term work and temporary agency
work
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Importance of TAW in Germany
o Focus on TAW rather than fixed-term work more generally
o TAW in Germany:
– Temporary agency work is a form of employment where workers are employed
by agencies (temporary work agencies) which in turn hire them out to a third
party (the client company) where they work temporarily under the client
company’s direction and supervision
– The temporary worker is considered an employee of the temporary work
agency, not of the hiring company
– During the employment relationship the temporary worker can be hired out to
several client companies.
o Increasing rates of precarious work
– Temp agency work (TAW) more than doubled over the last
decade (800,000)
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Development of TAW 1980-2014
Source: Bundesagentur für Arbeit 2015
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De- and re-regulation of TAW (1)
o Legal since 1972, but comprehensive regulation (not wages)
o Step by step relaxation following pressure from employers
– E.g. duration of TAW spell at same company
o 2003: Comprehensive de-regulation through Hartz-reforms
– E.g. synchronization ban to re-employ agency workers after a
3-month period was removed
– In return: Equal Pay Principle but little effect in practice due to
possibility to conclude lower sectoral collective agreements
o Changes in recent years based on social dialogue
– industry MW since 1/2012
– ‘revolving-door-clause’: forbids re-hiring of former staff on
poorer terms as agency workers (less than 6 months after)
– User companies must inform agency workers about vacancies
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De- and re-regulation of TAW (2)
o Since 2011 increase of TAW slowed down and usage of
sub-contractors (Werkverträge) went up
o Current plans for TAW (coalition agreement 2013)
– Duration max 18 months in the same company
– Equal Pay after 9 months
– But most TAW spells and contracts are still very short (10 months
on average)
o More comprehensive proposals aim at an integrated
approach to restrict the increasing usage of subcontractors, too
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Social Dialogue and TAW
o ‘better-agreements’
– 2012/2013 new collective agreements on TAW were
concluded in eleven sectors (i.e. metal)
– user companies must pay certain supplements in
addition to the minimum rates in the TAW collective
agreement for agency workers
– introduce an obligation for equal pay after a certain
period of time.
o But deviation from equal pay principle still possible and
practiced
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Case study (1) Collective agreements + equal pay
o Equal pay principle since 2003
– Loophole: Collective agreements can agree on lower wages
and therefore ignore the equal pay principle
o DGB divided if it is beneficial to negotiate collective
agreements that undercut the equal pay principle
o 2016: current collective agreement will expire
– Case study will do a process tracing of negotiations
– Why and how does this loophole persist?
o Gaps: Representation gap + regulation gap
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Case study (2) BMW Leipzig plant
o The BMW Leipzig plant employment model:
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1) subcontractors
2) temp agency workers
3) fixed-term workers
4) core workers
The goal is to be able to advance from stage 1 to stage 4
In-house min. wage of above 10€
Industry: metal
Gaps: Representation gap + regulation gap
Q: Is this is a ‘best case’ or a ‘problematic case’?
Cost-driven subcontracted work
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Posted Work
o Re-regulation of TAW prompted firms to resort more
strongly on subcontracting (including bogussubcontracting)
– avoidance of CA’s and the regulatory framework of TAW
– Increase in posted work in certain sectors (construction and meat
slaughtering and processing)
– Construction: traditionally posting destination
– Meat previous regulation important: meat industry not included into
German Posting Law (no min. wage but home country wage)
leading to a situation where workers earned 3-5€ per hour with no
right for paid holidays according to German law  this changed
with sectoral and national min. wage
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PDs A1 for posted workers issued by sending
Member States, 2013 (in 1000)
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Solo-self-employment
o The number of solo-self employed has increased much more
than the number of employees over the last years
o The number of dependent employees has increased by 5%
between 2000 and 2012
o The number of solo-self employed has increased by 40% in the
same time period (Brenke 2013).
o Unlike in the beginning of the 2000’s solo-self employed now
constitute the majority among self-employed (with or without
employees), which overall account for 11,7% of the workforce –
still a relatively low share compared to most other European
countries
o The strong rise in solo-self employment construction sector
– Eastern Europe
– not subject to the minimum conditions set by PWD and min.
wage
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Numbers of Posted Workers send to the German
construction industry
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Enforcement gaps posted workers
o non-compliance of posted worker regulations
– Miscalculation of working hours and wages
– Miscategorisation of workers into lower pay scales
– Social security contributions paid in the sending country  difficult
for the enforcement agencies to oversee whether social security
contributions are actually paid
– widespread non-compliance of sick pay and paid holidays
– Insufficient administrative cooperation between labour
inspectorates across borders
o proliferation of subcontract work has not substituted for
non-compliance, but rather contributed to facilitate it
o  case studies address ‘best practice’ efforts as to how to
enforce compliance down the subcontracting chain
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New regulation and trends
o The issue of enforcement has gained in importance with
the introduction of the national minimum wage
o Minimum wage came along with a general contractor
liability (existed already in construction) enforcing
employers to watch over their sub-contractors‘ compliance
with labour laws, thereby (potentially) enhancing ‘selfenforcement’
o Meat industry: big meat producers committed themselves
to shift production from using firms with home base
abroad (and posted workers) to using subcontracting
companies who are registered in Germany. (see case
study 1)
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Case study (1) meat industry self-commitment
o Industry: meat industry
o Gaps: Regulation gap + enforcement gap
o In September 2015 the German meat industry signed a selfcommitment to improve the working and housing conditions for
workers in the meat industry
o Public shaming and political pressures led the meat industry to adopt
this self- commitment
o It contains a provision to stop using posting contracts (i.e. hiring firms
with home base abroad) by July 2016 and to hire subcontractors
registered in Germany.
o It also contains a provisions to improve the housing conditions of
workers (who are foreign and in the area for a temp. period) in the
meat industry.
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Case study (2) Meyer Werft CA subcontract workers
o Industry: Metal/shipbuilding
o Gaps: Regulation gap + enforcement gap + representation gap
o The case: CA for subcontract workers containing
– information-, control-, and participation rights for works coun.
– subcontracting firms have to adhere to social standards
(working times, health and safety, housing and min. wage)
– Permanent working group (works council and management)
controls the implementation
– An in-firm arbitration committee can be consulted
– Works coun. informed in detail about subcontracting relations
– If the works council demands, it can look into the contracts and
nature and scope of service work of the subcontractors.
– CA has by been extended to Neptun and Rostock
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Case study (3) Thyssen sustainable sourcing
o Industry: metal
o Gaps: Regulation gap + enforcement gap + representation gap
o Thyssen has introduced a system of checks and balances in order to
reduce the number of work related accidents in subcontracting firms
o The works council is informed in detail about the subcontracting
relations and evaluates the employment relations in the
subcontracting firms on the basis of a network of different works
councilors in the firm who must feel the responsibility to represent the
employees of a subcontractor
o The firm evaluates if the work needs to be outsourced or if it can be
done in-house.