Posted Workers Act extended to industrial cleaning

On 23 August 2006, the federal government approved the draft bill that will extend the Posted Workers Act to the industrial cleaning sector. When the amended act comes into force in 2007, posted workers will be entitled to the minimum standards of working conditions and the minimum pay rates set by the industry’s framework collective agreements. On 28 August 2006, the sector’s bargaining parties renewed the collective wage agreement, which fixes the minimum hourly wage at €7.87 in western Germany and €6.36 in eastern Germany. For the first time, the Posted Workers Act will cover workers other than those in the construction sector.

On 23 August 2006, the federal government approved a bill to extend the Posted Workers Act (Arbeitnehmer-Entsendegesetz, AEntG) to the industrial cleaning sector (press release, in German, 23 August 2006). The new regulation will come into force in 2007. It extends the minimum standards on working conditions and minimum pay rates set by the industry’s framework collective agreements to cover posted workers (i.e. workers from one EU Member State sent temporarily by their employer to work in another).

For almost a decade, the Posted Workers Act has been restricted to the construction sector. However, the new amendment paves the way for other sectors to be included in the act in the future, for example those industries facing serious competition because of low wage rates paid by foreign companies.

Background

The Posted Workers Act gives posted workers the protection of German statutory minimum standards in areas such as working time, paid leave, health and safety, maternity entitlements and equal treatment (DE0306207T). Furthermore, the law provides that posted workers should be covered by the same minimum collectively agreed wages and collectively agreed provisions on paid holidays as German workers.

The act enables the Ministry of Labour and Social Affairs (Bundesministerium für Arbeit und Soziales, BMAS) to declare a collective agreement to be generally binding by a ministerial directive. This effectively allows the circumvention of the requirement of section 5 of the Collective Agreements Act (Tarifvertragsgesetz) (DE9905200F), which sets out that a committee, consisting of three trade union and three employer representatives from different industries, must approve the extension of a collective agreement by a majority of at least four votes.

In the industrial cleaning sector, the Trade Union for Building, Forestry, Agriculture and the Environment (Industriegewerkschaft Bauen-Agrar-Umwelt, IG BAU) and the Association of the Federal Guild of Cleaning Building Service Contractors (Bundesinnungsverband des Gebäudereiniger-Handwerks, BIV) concluded a general framework collective agreement and a collective wage agreement. Both agreements have already been extended to cover all of the sector’s employees in Germany but they do not yet apply to posted workers.

At present, the industrial cleaning sector has a workforce of about 700,000 people, the majority of whom are women. About 315,000 employees have so-called mini-jobs, that is part-time jobs not paying more than €400 a month, which is the threshold for social security contributions. In all, 80% of the workers with mini-jobs are women.

Terms and conditions in industrial cleaning

The 2004 general framework collective agreement for blue-collar workers sets a weekly working time of 39 hours, an overtime and a night shift bonus of 25% of the hourly wage, and 28 to 30 days of paid annual leave. The collective wage agreement was renewed by the bargaining parties on 28 August 2006. However, the wage rates set in 2004 remain unchanged, standing at a minimum hourly wage of €7.87 for workers in western Germany and €6.36 for workers in eastern Germany.

More recently, an additional leave bonus was agreed that provides for 1.87% of the hourly wage to be paid per day of paid leave. IG BAU considers that this bonus could effectively mean a wage increase of 2.73% depending on the worker’s grade. The union will thus apply to BMAS to include this settlement in the extension of the framework collective wage agreement.

The holiday bonus is valid until 31 December 2009, while the wage agreement is valid until 31 December 2007. By extending collectively agreed minimum terms and conditions for posted workers, the Posted Workers Act in fact defines a minimum pay rate for the industry.

Reaction of unions and employers

The Chair of IG BAU, Klaus Wiesehügel, welcomed the extension of the Posted Workers Act, highlighting the fact that the act includes fines for employers who do not pay their workers the minimum wage. According to Mr Wiesehügel, the Posted Workers Act has already proved to be effective in the construction sector.

BIV, which represents mainly small and medium-sized enterprises (SMEs), has taken a clear stand in favour of an industry-wide minimum wage and would even prefer a statutory national minimum wage to ease its enforcement.

In sharp contrast, the Confederation of German Employers’ Associations (Bundesvereinigung der Deutschen Arbeitgeberverbände, BDA) opposes both the extension of the Posted Workers Act as well as a statutory minimum wage. These differences of opinion between the BDA and the construction sector employer organisation are similar to those of previous years (DE9909117F).

Commentary

In the past, many employers in the industrial cleaning sector did not pay their employees according to the existing collective wage agreements. It now remains to be seen whether the extension of the Posted Workers Act will have a significant impact in terms of enforcing the minimum wages in the industry.

The question of whether to extend the Posted Workers Act to other sectors remains a controversial matter among the coalition government of the conservative Christian Democratic Party (Christlich Demokratische Union, CDU), its Bavarian associate party the Christian Social Union (Christlich-Soziale Union, CSU) and the Social Democratic Party (Sozialdemokratische Partei Deutschlands, SPD), as does the idea of introducing a statutory national minimum wage.

Birgit Beese, Institute of Economic and Social Research (WSI)

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