Labor Laws

Industry, Ministry Clash Over Temps

temp worker EB-Stock
Some 1.2 million, or 28 percent, of all self-employed have contracts that exempt companies from contributing to social insurance schemes, according to a report by the EY consultancy.
  • Why it matters

    Why it matters

    Draft legislation designed to stop isolated cases of labor abuse in Germany could cause massive problems for companies that have been increasingly relying on temporary workers for wide range of outsourced jobs.

  • Facts


    • German industry leaders met with labor minister to try to water down draft legislation that would impose greater controls on hiring temporary workers.
    • Numerous companies in the country are relying increasingly on temporary workers.
    • Reliance on self-employed could be costing social insurance system billions each year.
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Germany’s powerful labor minister has a major fight on her hands with the country’s conservative business leaders.

New draft legislation by Labor Minister Andrea Nahles, designed to give more protection and pay to temporary workers, could seriously impact the business models of numerous firms in Germany that need to respond flexibly and quickly to fluctuating market conditions, say industry leaders in the country.

The executives have been working overtime to water down the measure, proposed by the cener-left minister last month, and protect an increasingly popular labor market tool to increase – or decrease – workforces depending on demand. They may even have Germany’s conservative chancellor, Angela Merkel, on their side.

The number of temporary workers in Germany soared from 328,000 in 2003 to about 800,000 in 2015. These workers, say their supporters, fill a gap in the nation’s labor market, where strict job protection rules and the high costs associated with discharging employees have traditionally served as a deterrent to hiring people.

Ms. Nahles sees it differently: She hopes to introduce new restrictions on the use of temporary workers whom she and her center-left Social Democratic Party claim are being abused by various companies trying to circumvent job protection rules. The restrictions would limit temporary work to a maximum of 18 months, although exemptions would be made for certain sectors, such as the metal and electronic engineering sector, that have already implemented their own caps.

Industry experts warn that companies haven’t factored in the risk that they could lose the battle with Ms. Nahles and the German government. Markus Lohmeier, a partner at consulting firm EY, warned of “enormous” damages, including billions of euros in fines and back taxes if companies don’t clean up their act and change the way they hire temporary labor.

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