Germany: Latest working life developments – Q2 2016

The strong stability of industrial relations in in the face of controversy over migration policies, the rise of right-wing populist campaigns and responses to the vote on Brexit are the main topics of interest in this article. This country update reports on the latest developments in working life in Germany in the second quarter of 2016.

This article should be read against the background of a political climate that was affected by the election results at Länder (regional) level in March 2016. The elections led to new government coalitions: Greens/Christian Democrats in Baden-Württemberg; Christian Democrats/Greens/Liberals in Saxony-Anhalt; and Social Democrats/Liberals/Greens in Rhineland-Palatinate. However, the results also highlighted the rise of the right-wing populist party, Alternative for Germany. Bavaria’s Christian Social Democrats took up the role of a conservative opposition party to the federal government coalition with regard to migration policies.

Industrial relations

Germany enjoyed an ongoing positive economic climate during the second quarter of 2016. The Federal Employment Agency reported slight, but stable, employment growth. At the end of June, unemployment stood at 5.9%.

The economic situation mirrored collective bargaining results. The bargaining rounds in the core sectors were settled with above-average pay rises and without major conflicts. The social partners in the metalworking, electrical, chemicals, construction and the federal and municipal services sectors gained pay rises of between 4.6% and 5.3% over two years. The chemicals sector adopted an initiative to provide funds for a workplace training programme for German nationals (and asylum seekers) with deficits in their education.

The bargaining rounds in the chemicals and construction sectors were concluded without industrial action. Although bargaining in the public sector and in the metalworking sector involved large waves of warning strikes, the situation did not escalate to full-scale disputes. It is expected that the days not worked due to industrial action in 2016 will be only around one quarter of the two million days not worked for this reason in 2015.

In June, the Minimum Wage Commission, introduced by the Minimum Wage Act in 2014, took its first decision by recommending an increase of 34 cent an hour with effect from 1 January 2017. The statutory hourly minimum wage will then be €8.84 rather than the current €8.50. The 2016 decision was taken unanimously. The government has already indicated it will accept the proposal.

Legislation

Against a background of a rise in anti-migration sentiment, the research institute Prognos released data indicating that Germany still needs a large influx of foreign labour if it is to meet its labour shortages. Trade unions and employer organisations agree in principle to measures making early labour market access easier for asylum seekers and refugees, but differ with regard to the specific regulations and labour market measures.

On 7 July, Parliament passed the Integration Act, which introduced a range of new measures paving the way into the labour market for those asylum seekers and refugees who are expected to stay in the country for a longer period of time. Some of these measures, such as easy access to temporary agency work, low-wage jobs in the public sector and a sanction system for asylum seekers not willing to attend integration courses have proved controversial.

At the beginning of June 2016, Parliament also passed legislation on further training, which introduces premiums of up to €1,500 for long-term unemployed or low-qualified people who have successfully completed intermediate or final examinations in vocational training courses. Several employer associations have raised concerns that the premium will give the wrong incentives to young adults.

Brexit shock

The public debate at the end of the second quarter of 2016 was marked by discussions about the likelihood and possible consequences of a ‘leave’ vote in the referendum about the future of the UK within the EU. The final outcome of the referendum was met with regret by the federal government, the Confederation of German Employers’ Associations (BDA) and the German Confederation of Trade Unions (DGB). The discussion about the consequences of the referendum will certainly play a role in German politics in the months to come.

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