R EDUCING P RECARIOUS W ORK IN E UROPE T HROUGH S OCIAL D IALOGUE T HE C ASE OF G ERMANY O KT 2016,...

REDUCING PRECARIOUS WORK IN EUROPE THROUGH SOCIAL DIALOGUE

THE CASE OF GERMANY

OKT 2016, DUISBURG MEETING

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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 De-Regulation + 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‘

In a nutshell…

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Employees in non-standard jobs (in Mio.)

3


Inequality of annual gross labour income

4Source: Grabka 2015


Evolution of real wages (full-time employees)

5Source: Felbermayr et al. 2014: 11

20%-percentile Median 80%-percentile


Standard employment


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 councilo Strategies of trade unions + employers

– fragmentation due to craft unionism, yellow unions + single-employer bargaining

– partly successful trade union revitalization strategies aimed at increasing + using organisational power

– Law on tariff unity contested within trade union camp

Regulation + Representation Gaps

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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 firmso 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

Enforcement gaps

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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 levelso 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

Social protection gaps

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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

Case studies (1): Public Procurement in Bremen

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o Gaps concerned: Regulation + Representation gapo Industry: (airport) securityo 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

Case studies (2): Collective agreements in the airport security industry

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Less-than-full-time employment


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

Regulatory gaps

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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‘)

Representation gaps + Industrial relations

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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

…industrial relations / Social protection gaps

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o Gaps concerned: Regulation + Social protection gapo Industry: hospitality or retailo 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’?

Case studies (1): Marginal part time jobs in the retail and/or hospitality industry

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o Gaps concerned: Regulation gapo Industry: airport security industryo 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

Case studies (2): Collective agreement in aviation industry

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Fixed-term work and temporary agency work


Importance of TAW in Germanyo Focus on TAW rather than fixed-term work more generallyo 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)


Development of TAW 1980-2014

Source: Bundesagentur für Arbeit 2015


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


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 sub-contractors, too


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


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


Case study (2) BMW Leipzig plant

o The BMW Leipzig plant employment model:– 1) subcontractors– 2) temp agency workers– 3) fixed-term workers – 4) core workers

o The goal is to be able to advance from stage 1 to stage 4 o In-house min. wage of above 10€o Industry: metalo Gaps: Representation gap + regulation gap o Q: Is this is a ‘best case’ or a ‘problematic case’?

Cost-driven subcontracted work


Posted Worko Re-regulation of TAW prompted firms to resort more

strongly on subcontracting (including bogus-subcontracting)– 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


PDs A1 for posted workers issued by sending Member States, 2013 (in 1000)


Solo-self-employmento The number of solo-self employed has increased much more

than the number of employees over the last yearso The number of dependent employees has increased by 5%

between 2000 and 2012o 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


Numbers of Posted Workers send to the German construction industry


Enforcement gaps posted workerso 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


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 ‘self-enforcement’

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)


o Industry: meat industryo Gaps: Regulation gap + enforcement gapo In September 2015 the German meat industry signed a self-

commitment 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.

Case study (1) meat industry self-commitment

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Case study (2) Meyer Werft CA subcontract workers

o Industry: Metal/shipbuildingo Gaps: Regulation gap + enforcement gap + representation gapo 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


Case study (3) Thyssen sustainable sourcingo Industry: metalo Gaps: Regulation gap + enforcement gap + representation gapo Thyssen has introduced a system of checks and balances in order to

reduce the number of work related accidents in subcontracting firmso 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.

R EDUCING P RECARIOUS W ORK IN E UROPE T HROUGH S OCIAL D IALOGUE T HE C ASE OF G ERMANY O KT 2016,...

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