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The current economic and labour market situation in Germany, fixed-term employment, collective bargaining to adapt working conditions in eastern Germany and the European Court of Justice judgement on recording working time 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 2019.
German GDP levelled at the beginning of 2019, after a slight decline in December 2018. This growth continued throughout the first quarter of 2019, with GDP increasing by 0.4% compared to the previous quarter. Despite this positive trend, experts continue to lower their growth prognosis for 2019. In April, the German government adjusted its previous forecast from January of 1.0% to 0.5% for 2019. [1]
Ongoing trade conflicts between the USA and China, as well as between the USA and Europe, are having a negative impact on Germany’s export rates and economic growth. In April, exports decreased by 3.7% compared to March 2019. In comparison to April 2018, they were 0.5% lower. [2]
The German labour market shows few signs of being affected by the current economic situation. While the number of unemployed people increased by 7,000 from April to May 2019 (reaching 2,236,000), the unemployment rate decreased from 5.3% at the beginning of the year to 4.9% in May. In addition, the number of employed people increased to 45.14 million in May, which is over 400,000 more than at the beginning of the year (44.72 million in January).
The number of people in fixed-term employment reached a record high of 3.2 million in 2018, according to results from the Institute for Employment Research (IAB) Establishment Panel 2018 survey, and two out of five placements (44.1%) were based on fixed-term contracts. The main motive driving employers to use fixed-term employment is to assess the suitability of employees for the job (36.7%). Other reasons are the need for substitutes (e.g. in case of illness) (18.1%) and the need for additional workforce due to increased demand (11.9%).
The survey results also show that the motives of employers vary depending on the economic situation. Compared to 2009, at the start of the economic and financial crisis, the uncertain economic situation (22%) was one of the main motives for fixed-term employment, whiles checking an employee’s suitability was significantly lower (23.8%) than in 2018.
Looking at fixed-term employment in relation to the economic situation reveals its conflicting nature. While employees on a fixed-term contract are easier to dismiss during an economic recession, fixed-term employment can help to increase employment during an economic boom. Therefore, without the possibility of fixed-term contracts, employers might be cautious about hiring new people.
As the German labour market is in a strong position, the positive effects of fixed-term employment (e.g. access to the labour market) prevail. Additionally, statistics show that after the end of a fixed-term contract, 44.2% of workers are taken on by the employer. In terms of personnel departures, only 11.1% can be attributed to expiring fixed-term contracts, whereas 43.4% are voluntary terminations by employees.
The government plans to limit unfounded fixed-term employment (affecting 1.8 million workers) in the hope that employers will offer permanent contracts in the future. A draft on a possible legislation is expected to be put forward by Hubertus Heil, Federal Minister of Employment and Social Affairs, in the future.
While there were no major collective bargaining conflicts or agreements in the second quarter of 2019, negotiations were initiated between employer organisations in the metal and electrical industry in eastern Germany and the German Metal Workers’ Union (IG Metall) regarding the adaptation of working conditions regulations. The new collective agreement is designed to strengthen bargaining coverage and adapt working conditions regulations in order to secure jobs and investments in the region. [3]
After six rounds of negotiations, the employer organisations and IG Metall have yet to reach an agreement. The main point of conflict is an adaption of working time regulations. Employer organisations propose transferring the decision-making powers to works councils when it comes to reductions in working time. The union rejects this and believes that the current distribution of tasks between trade unions and works councils should not change. [4] Negotiations are expected to continue in the third quarter.
On 14 May 2019, the European Court of Justice (ECJ) ruled that employers are obliged to systemically record the working time of their employees. According to the ECJ, this is the only way to verify whether an employee’s maximum permitted working time has been exceeded, therefore guaranteeing labour rights according to EU law. As a result, all EU Member States are required to ensure that employers introduce systems to record working time. Further details and the implementation process can be determined by each Member State.
The ruling has triggered much criticism in Germany, particularly from employer organisations. The Federation of German Employers' Associations in the Metal and Electrical Engineering Industries (Gesamtmetall) suggested that existing working time models, such as trust-based working hours, will become void. General Manager Oliver Zander stated that there should be an emphasis on new and flexible working forms and not on outdated systems with an added bureaucratic burden. [5]
Other employer organisations echoed Zander’s criticism, saying that the ECJ judgment is a step back and that ‘working time recording 1.0’ does not correlate with the government’s programme of a ‘working world 4.0’. Shortly after the ruling, the Federal Ministry for Economic Affairs and Energy announced that it will not implement the ECJ’s judgment for the moment. Instead, the ruling will be examined to determine whether there is an actual need for change in Germany. Federal Minister for Economic Affairs and Energy Peter Altmaier emphasised that the re-introduction of the time clock would be a blow to the existing culture of trust between employers and employees, and to the success of trust-based working hours in Germany. [6]
The German Trade Union Confederation (DGB) fully supported the ECJ judgment and urged the government to quickly implement the guidelines from the Commission, as a statutory foundation for recording working time would allow rest time and daily maximum working time to be monitored. [7]