Minimum wage for mail delivery workers

At the end of November 2007, the government announced its intention to introduce a minimum wage in the postal services sector, with effect from January 2008. The minimum wages will be binding for all workers involved in mail delivery services and the agreed hourly rate will range between €8 and €9.80, depending on the occupational category and region. Following the decision, some competitors of the market leader Deutsche Post announced that they would be forced to retreat from the market, to a certain degree, as they could not afford to pay the new rates.

On 29 November 2007, the German coalition government – comprising 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) – announced its decision to introduce a minimum wage for the postal services sector, with effect from January 2008. This will be enabled by the inclusion of mail delivery services in the Posted Workers Act; it is expected that the decision will be endorsed by the two chambers of the German parliament before the end of 2007. In the EU, Germany represents an unusual case as it does not have a statutory national minimum wage. Instead, the government can set minimum wages on a case-by-case basis for individual industry sectors by including these sectors in the Posted Workers Act (DE0710019I).

Collective agreement declared binding

The government’s decision means that a collective agreement negotiated between the United Services Union (Vereinte Dienstleistungsgewerkschaft, ver.di) and the Employers’ Association of Postal Services (Arbeitgeberverband Postdienste), which in particular represents the market leader Deutsche Post AG, can be declared binding for the whole industry, with effect from 1 January 2008.

This collective agreement defines mail delivery services as all operations dealing with the collection, handling and delivery of written correspondence weighing no more than 1,000 grammes. It will provide for general minimum hourly pay rates of €8 in eastern Germany and €8.40 in western Germany, including Berlin. For postal workers, the minimum rates will be set at €9 an hour in eastern Germany and at €9.80 an hour in western Germany, including Berlin. The question of whether the eastern or western rates are applicable will depend on where the service is delivered rather than on where the company is located. Moreover, from 1 January 2010, the eastern rates will expire and a uniform minimum hourly wage rate of €8.40 in general and of €9.80 for postal workers will come into effect.

Postal services industry in context

Prior to 1998, the distribution of written correspondence had been exclusively provided by the Federal Postal Service (Deutsche Bundespost). Following the privatisation of the postal services, this monopoly privilege (Briefmonopol) was passed to Deutsche Post AG, the successor of the Federal Postal Service. In 1998, this privilege was slightly modified and currently only extends to postal items that are distributed within the national borders and that weigh less than 50 grammes. Since 1998, private operators have been able to enter the postal services market for products that exceed the 50 grammes weight threshold under certain conditions. For postal items that weigh up to 1,000 grammes, companies have to apply for a licence from the Federal Network Agency for Electricity, Gas, Telecommunications, Post and Railways (Bundesnetzagentur). However, from 1 January 2008, the provision of postal services will become completely open to private operators.

In addition to Deutsche Post, several private companies are currently operating in Germany’s postal services sector. During liberalisation, a number of large newspaper publishing houses began to establish subsidiaries which entered the mail delivery market. Two of the largest competitors of Deutsche Post are the Luxembourg-based PIN Group, which is majority-owned by the German publishing house Axel Springer, and TNT Post, a joint venture between the former Dutch public postal service TNT and the German Hermes Logistics Group (Hermes Logistik Gruppe).

Increasing focus on wages issue

In 2007, public debate on the liberalisation of mail delivery services increasingly centred on the wages issue. Wages and working hours at Deutsche Post are regulated through a collective agreement which was concluded between ver.di and the company. Negotiations about similar collective agreements for Deutsche Post’s main competitors failed. Ver.di accused the PIN Group of wage dumping. In order to protect employees at Deutsche Post from unfair competition, the union demanded that a minimum wage be introduced. As mentioned, the government can set minimum wages on a case-by-case basis for individual industry sectors by including these sectors in the Posted Workers Act.

Protection of workers

The Posted Workers Act of 1996 provides the workers concerned with the protection of German statutory minimum standards in areas such as working time, paid leave, health and safety, maternity and equal treatment. Furthermore, the law stipulates that posted workers should be covered by the same minimum collectively agreed pay rates and collectively agreed provisions regarding paid holidays as German workers are. This objective is accomplished through the extension of collective agreements (Allgemeinverbindlichkeitserklärung). Such extensions apply the terms and conditions of a collective agreement to those workers who are not covered by any agreement either because they are not members of the signatory trade union or their employer is not a member of the employer organisation which is party to the agreement.

Division over introduction of minimum wages provision

Although ver.di won the support of Deutsche Post regarding the introduction of minimum wages, competitors of the market leader were strictly opposed to any statutory regulation of wages in the industry. Both sides accused each other of putting jobs at risk by either demanding a minimum wage or preventing its introduction. Meanwhile, a study commissioned by Bundesnetzagentur found that the wages and conditions provided by new market entrants were well below the collectively agreed standards offered at Deutsche Post. However, the study also argued that wages at Deutsche Post’s competitors exceeded the wage level that ver.di wished to see established as a cross-sectoral national minimum wage and should instead be compared to wages in other comparable industries rather than those at Deutsche Post (DE0706039I); nevertheless, ver.di rejected this argument.

In the political arena, the introduction of a national minimum wage emerged as a controversial issue within the coalition government, with the SPD favouring the introduction of a minimum wage, while the conservatives were reluctant to follow such a line. The agreement finally reached within the coalition on 29 November was made possible by the revision of the collective agreement made between ver.di and Deutsche Post. Both parties agreed on a revision of a collective agreement on minimum wages concluded earlier in 2007, in order to limit its scope to those companies and their subsidiaries whose business is ‘predominantly’ in the mail delivery services sector. This revision limits the number of workers covered by minimum wages. The move aimed to meet the demands raised by the CDU as a precondition to any final compromise within the coalition.

Reactions to government decision

The government decision met the expectations (in German) of ver.di that the way should be paved for a national minimum wage in the postal services industry prior to complete liberalisation on 1 January 2008. Conversely, the President of the Confederation of German Employers’ Associations (Bundesvereinigung der Deutschen Arbeitgeberverbände, BDA), Dieter Hundt, issued a statement (in German) arguing against the government’s decision and warning against the introduction of even more sectoral minimum wages.

Following the government’s announcement, TNT Post revealed its decision to stop plans to extend its service to private customers. The decision was attributed to rising costs owing to the announced minimum wage provisions. On 4 November 2007, in a dramatic reaction to the government’s decision, the PIN Group announced that it was going to dismiss 1,000 of its 9,000 employees and threatened that even more jobs could be put at risk if the minimum wage was introduced. In an article (in German) published in the news magazine Der Spiegel, an executive council member of the Confederation of German Trade Unions (Deutscher Gewerkschaftsbund, DGB), Klaus Matecki, condemned the move and referred to it as an attempt at blackmail, carried out on the back of employees. Meanwhile, in reaction to the decision made by the PIN Group, its competitor Deutsche Post announced that it was willing to offer jobs to the 1,000 employees due to be dismissed at PIN.

Commentary

The reactions of some of Deutsche Post’s competitors give weight to the argument that competition in a liberalised postal services market is primarily based on low wages and not on quality of service. Moreover, such reactions underline ver.di’s fears that terms and conditions in the postal services industry would be put at risk if the opening of the market was not flanked by statutory regulation. It is likely that the debate on introducing a national minimum wage will continue. Despite the criticisms raised by employers, other industries are already making demands to regulate competition through the introduction of minimum wages. According to press reports, members of the butcher profession plan to enter into talks with the Trade Union of Food, Beverages, Tobacco, Hotel and Catering and Allied Trades (Gewerkschaft Nahrung-Genuss-Gaststätten, NGG) at the beginning of 2008, with the aim of negotiating a collective agreement on minimum wages for those in the meat trade.

Heiner Dribbusch, Institute of Economic and Social Research, WSI

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