Bad Boss

Germany's Most Hypocritical Employer -- The Government

Putzfrau im Bundestag
A cleaning lady in the German lower house of parliament, or Bundestag.
  • Why it matters

    Why it matters

    Despite introducing a new minimum wage, by outsourcing jobs and employing many staff on fixed-term contracts, the German government is not acting as a model employer.

  • Facts

    Facts

    • Germany is introducing a minimum wage of €8.50 next year.
    • A European court ruled Germany’s Federal Printing Office could employ a Polish contractor even though it paid lower wages.
    • One in five public servants aged under 30 is on a fixed-term contract.
  • Audio

    Audio

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Andrea Nahles, Germany’s labor minister, fought hard for the country’s new general minimum wage of €8.50, or $10.90, that comes into force in 2015. Exceptions, for example for long-term unemployed, had to be painstakingly wrenched from her. What impression is made then, if a state-owned company outsources work abroad, thereby circumventing the state’s own existing minimum wage rules?

This is a question that has arisen following a verdict handed down by the European Court of Justice last Thursday. According to the ruling, the Bundesdruckerei, or Federal Printing Office, is entitled to commission a Polish subcontractor, even if it does not pay the wages that would be paid for the same work in Germany.

There are no legal loopholes in the state’s case, but it is nevertheless questionable. It shows once again, that the government is not fulfilling its role as a model employer often enough.

“The public sector especially should set a good example and prevent everything that promotes wage dumping processes,” said Stefan Körzell, a board member of the Federation of German Trade Unions, known as the DGB.

The federal government as owner of the Bundesdruckerei should not allow anything that would circumvent the minimum wage, such as buying cheaper services via subsidiary companies in neighboring countries,  Mr. Körzell argued.

Achim Meerkamp, director of the Verdi trade union, says that the state has increasingly stepped back from its duties in recent years. That is evident from the staff reductions, the growing number of temporary work contracts in the public sector and the outsourcing of services formerly provided by the state.

“Fleeing collective bargaining agreements and wage dumping were in many cases a motive for outsourcing,” criticized Mr. Meerkamp. Along these lines, the state forestry operators in the state of Brandenburg did not shy away from awarding contracts to third parties, something that was recently criticized by IG BAU, the labor union for construction, agriculture and environment. These contractors only paid their employees €4.10 per hour.

“The public sector especially should set a good example and prevent everything that promotes wage dumping processes.”

Stefan Körzell, Federation of German Trade Unions

If the government wants to prevent the abuse of work contracts in the future, as promised in the coalition contract between the two ruling parties, the Social Democrats and the Christian Democrats, it doesn’t have to go far to find negative examples. “If the state itself does not comply with its own rules, then who will follow them?” asked Robert Feiger, the head of IG BAU.

The same goes for temporary, or fixed-term employment contracts, which sees many employees given one or two year contracts after which they are either made permanent or have to seek new employment. The Social Democrats would prefer to get rid of the so-called “unfounded fixed-term contracts,” but could not, however, convince the conservative CDU.  However, the CDU members of the parliamentary social council, a committee that deals with welfare and labor issues, regard it as “unacceptable,” that more than one it 10 work contracts currently have an expiration date.

These unacceptable contracts, however, also pertain to public jobs. The tight budgets of the federal government, states and communes have not only led to massive staff reductions. The number of temporary contracts have also increased by a third within 10 years, something the German Association of Public Servants union has criticized.

Among civil servants under 30, it can be assumed that every fifth person has a fixed-term contract today, according to figures released by the government following a request by the opposition Left Party this spring. The case of a court clerk in North Rhine Westphalia, who received 13 back-to-back such contracts over a period of 11 years, even made its way to the European Court of Justice two years ago.

The public service employers and labor unions have recognized the need for action. In the spring, they agreed to have the high level of temporary employment in the public service assessed. The Institute for Employment Research, based in Nuremburg, intends to present its final report in October of the coming year.

The Nuremburg researchers should take a particularly close look at the federal ministries: In the past year, the departments of health, family and agriculture only offered a fixed-term contract to nine out of 10 new hires. In the overall economy the quota is 42 percent.

These kinds of figures are a cause of irritation not only for those affected, but also for those in the temporary work sector: “Ministries that limit contracts to one or two years, somehow represent secure employment, while temporary work that is unlimited, socially insured and regulated by collective wage agreements is being demonized,” criticized Dieter Traub, the managing director of the temporary work company Orizon.

Interestlingly, the CDU-SPD coalition has said it wants to see the temporary work sector more strictly regulated. Yet, the federal ministries and administrative bodies alone still had at least 2,000 temporary workers on their books just two years ago.

Frank Specht writes about the jobs market and labor unions from Handelsblatt’s Berlin office. To contact the author: specht@handelsblatt.com 

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