Paid overtime falls slightly as debate intensifies
Published: 24 February 2002
On 15 January 2002, the Federal Employment Service (Bundesanstalt für Arbeit, BfA) announced [1] that in 2001 the total amount of paid overtime worked in Germany amounted to 1.735 billion hours - see table 1 below. This represents 3.6% of all employees' working hours, down by 0.1 percentage point in comparison with 2000 (DE0101201N [2]). During the 1990s, this share remained practically unchanged between 3.5% and 3.8%. The volume of overtime in 2001 fell by 50 million hours in comparison to the previous year. According to the BfA, the main reason for the reduction was a cyclical slowdown in economic growth. In addition, more overtime hours were compensated for in time off because of the increasing spread of 'working time account' schemes (DE9803255F [3]).[1] http://www.arbeitsamt.de/hst/services/pressearchiv/04_02.html[2] www.eurofound.europa.eu/ef/observatories/eurwork/articles/trade-unions-criticise-employers-over-increased-overtime-working[3] www.eurofound.europa.eu/ef/observatories/eurwork/articles/undefined-working-conditions/provisions-on-working-time-accounts-in-collective-agreements
In January 2002, Germany's Federal Employment Service published new figures on the amount of paid overtime being worked. With a total of 1.735 billion hours worked in 2001, overtime remains at a high level, even taking into account a fall of 50 million hours from the 2000 figure. While paid overtime has stabilised at a high level, unemployment in Germany has risen again, reaching around 4.3 million (10.4%) in January 2002. Discussions over a significant reduction of overtime and its impact on employment have, therefore, been gaining in importance.
On 15 January 2002, the Federal Employment Service (Bundesanstalt für Arbeit, BfA) announced that in 2001 the total amount of paid overtime worked in Germany amounted to 1.735 billion hours - see table 1 below. This represents 3.6% of all employees' working hours, down by 0.1 percentage point in comparison with 2000 (DE0101201N). During the 1990s, this share remained practically unchanged between 3.5% and 3.8%. The volume of overtime in 2001 fell by 50 million hours in comparison to the previous year. According to the BfA, the main reason for the reduction was a cyclical slowdown in economic growth. In addition, more overtime hours were compensated for in time off because of the increasing spread of 'working time account' schemes (DE9803255F).
| Paid overtime | |||
| Year | Average per employee* (hours) | Volume (million hours) | Share of total volume of work of employees (%) |
| 1991 | 62.0 | 1,895 | 3.6% |
| 1992 | 62.7 | 1,871 | 3.6% |
| 1993 | 60.3 | 1,761 | 3.5% |
| 1994 | 64.1 | 1,856 | 3.7% |
| 1995 | 64.6 | 1,857 | 3.8% |
| 1996 | 61.4 | 1,741 | 3.6% |
| 1997 | 60.8 | 1,689 | 3.5% |
| 1998 | 62.3 | 1,727 | 3.6% |
| 1999 | 62.3 | 1,740 | 3.6% |
| 2000 | 63.3 | 1,785 | 3.7% |
| 2001 | 61.5 | 1,735 | 3.6% |
* Refers to employees, excluding 'marginal' workers, vocational trainees, childcare leavers and those taking partial retirement.
Source: Institute for Employment Research (Institut für Arbeits- und Berufsforschung, IAB).
Differing estimates
In spite of the slight decrease, overtime remains at a high level. The impact of overtime on employment is highly contested. A study by the German Institute for Economic Research (Deutsche Institut für Wirtschaftsforschung, DIW) estimates that, taking an optimistic view, 200,000 new jobs could be created by reducing overtime. However, in a pessimistic scenario, DIW estimates only 20,000 new jobs. According to the DIW, through reducing overtime a noticeable increase in employment is essentially to be expected only for low-qualified workers - assuming that the supply of high-level qualified persons is much more restricted.
By contrast, the Institute for Economic and Social Research (Wirtschafts- und Sozialwissenschaftliches Institut, WSI) estimated employment effects of between 240,000 and 630,000 jobs through cutting overtime, in a 1999 study (WSI Mitteilungen, Düsseldorf, August 1999) based on information taken from the database of the Institute for the Research of Social Chances (Institut zur Erforschung sozialer Chancen, ISO). These estimates cover overtime work for low- and medium-qualified personnel and leave overtime for higher-qualified employees out of consideration, thus indicating more the lowest limit of employment possibilities as a result of the reduction of overtime. Hartmut Seifert, the WSI researcher concerned, concluded that, all in all, 'there remains considerable room for manoeuvre to reduce overtime, which could be useful in the creation of new jobs.'
Overtime is unevenly distributed between different groups of employees and branches of the economy. On average, men work three times as much overtime as women (1.3 hours per week, compared with 0.4 hours). There are slight differences in overtime levels corresponding to different skill levels, but great differences among sectors - see table 2 below. Overtime in branches of the economy with a high volume of overtime reaches between 60 and 120 hours per year for each manual worker, according to Hartmut Seifert. The highest level in 2000 was found in the recycling sector, with 2.7 hours per employee per week on average. At the opposite end of the range are branches with low levels of overtime, such as tobacco manufacture with an average of only 0.2 hours per employee per week. With an average of 0.5 hours per week, the chemical industry has a low level of overtime -a collective agreement on compensation for overtime in the form of time off limits the amount of overtime worked in this branch. According to WSI, procedures in such sectors with a low level of overtime should be examined, with the aim of establishing recommendations for other sectors and thereby achieving a noticeable reduction of overtime.
| Economic branch | Average paid overtime hours per week | ||
| Women | Men | Total | |
| Recycling | 0.5 | 2.9 | 2.7 |
| Mining | 0.4 | 2.5 | 2.5 |
| Metalworking | 0.8 | 2.0 | 1.8 |
| Paper industry | 0.8 | 1.9 | 1.7 |
| Mechanical engineering | 0.4 | 1.6 | 1.5 |
| Automobilw industry | 0.5 | 0.9 | 0.9 |
| Textile and clothing industries | 0.3 | 1.3 | 0.8 |
| Chemical industry | 0.3 | 0.5 | 0.5 |
| Tobacco manufacture | 0.1 | 0.4 | 0.2 |
Source: German Federal Statistical Office (Statistisches Bundesamt Deutschland).
Positions of the social partners
In January 2002, the Federal Ministry for Labour and Social Affairs announced that registered unemployment had risen to 4,290,000 people, a rate of 10.4%. This again highlighted the issue of paid overtime, with the necessity for overtime and its impact on employment disputed. While employers and their associations emphasise that overtime is inevitable in order to balance fluctuations in demand and fluctuations in production, supporters of the reduction of overtime argue that some aspects of overtime hinder employment.
The employers' line of argument is that there has been a trend towards the reduction of overtime over the last 30 years. According to the Confederation of German Employers' Associations (Bundesvereinigung Deutscher Arbeitgeberverbände, BDA), this development is in the first place a result of flexible working time arrangements and in particular the compensation of overtime with time off, in the form of working time accounts. Furthermore, the employers claim that the reduction of overtime is being blocked by the trade unions preventing the possibilities of extending the use of long-term working time schemes and lifelong working time accounts.
Consequently, say the employers, 'it is impossible to continue the reduction of overtime.' The strictly regulated labour market forces employers to fall back on overtime as the means of flexibility in the event of high orders, staff sickness or a short-term lack of qualified personnel. Imposing a limit on overtime through legislation, as demanded by some trade unions, is rejected. BDA argues that a general limitation of overtime will cost jobs, because overtime is unevenly distributed between branches of the economy, companies and company departments, and above all between employees with different levels of qualification. Referring to studies conducted by DIW and by the Institute for the Study of Labour (Forschungsinstitut zur Zukunft der Arbeit, IZA), BDA argues that a schematic conversion of overtime hours into new employment is not possible.
The unanimous criticism from the trade unions has focused on the high level of overtime and on the employers' apparent promise to reduce it, a promise which they have, it is claimed, not kept. As early as December 1998, the newly established national tripartite Alliance for Jobs (Bündnis für Arbeit) (DE9812286N) agreed to an 'employment-promoting distribution of work' and flexible working time arrangements whereby overtime could be reduced (though the use of working time accounts), along with the promotion of part-time work.
The unions have made a number of different proposals on how to decrease the amount of overtime. The Unified Service Sector Union (Vereinte Dienstleistungsgewerkschaft, ver.di) and the IG Metall metalworkers' union demand a legal limitation of overtime, while Hubertus Schmoldt, president of the Mining, Chemicals and Energy Workers' Union (IG Bergbau, Chemie, Energie, IG BCE) rejects regulation by the legislator. Mr Schmoldt prefers to obtain sectoral agreements providing for a general compensation of overtime by time off instead of pay premia - as already exists in the chemicals industry - in the current bargaining round.
Commentary
Although the reduction of overtime is not a top issue in the current collective bargaining round, it remains an issue of dispute in practical and theoretical terms. The high level of overtime shows that, although some overtime is necessary for the flexibility of enterprises, there remains a large amount of overtime which is the result of insufficient personnel planning or insufficient capacity calculations. It is necessary to collect information about the amount of overtime which is essential and the amount of overtime which is only occasionally required. Furthermore, different work organisation measures (eg training, working time accounts and reduction of working time) should be integrated. The reduction of overtime usually takes place with the introduction of new working time systems. Therefore, one has to acknowledge that overtime can be reduced. Currently, it seems that there is no intention to decrease substantially the amount of overtime and subsequently to redistribute the volume of work. Without regulation of the matter by collective bargaining, the issue of a legal restriction of overtime will remain on the political agenda. (Verena Di Pasquale, Institute of Economic and Social Research, WSI)
Eurofound recommends citing this publication in the following way.
Eurofound (2002), Paid overtime falls slightly as debate intensifies, article.
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