Germany: Latest working life developments – Q3 2016

Falling unemployment and an improved business outlook, the views of social partners on proposed equal pay legislation, and the rise of the right-wing AfD party are the main topics of interest in this article. This country update reports on the latest developments in working life in Germany in the third quarter of 2016.

Good outlook for employment and wages

The growth in German gross domestic product (GDP) slowed in the second quarter of 2016. Price-adjusted GDP grew by 0.7% in the first quarter of 2016 and by only 0.4% in the second quarter in 2016 (both figures are in comparison with those for the previous quarter).

The Federal Employment Agency (BA) reported at the end of September 2016 that unemployment had fallen to 5.9% due to an improved business outlook for the autumn season.

The Institute for Economic and Social Research (WSI) estimated that collectively agreed, price-adjusted wages across industries will rise by 2.5% in 2016 compared with the previous year. Already by mid-2016, several businesses had negotiated collective wage agreements.

Collective bargaining rounds in the public, metalworking, electrical and transport sectors (including the railways and airline Lufthansa) were accompanied by warning strikes. However, the number of working days lost through strikes was far lower than in 2015.

Unions’ wage claims in single branches ranged between 4.5% and 6%. The Confederation of German Trade Unions (DGB) stated that companies’ record earnings, the flourishing export business and positive economic growth all justified unions’ claims for higher wages.

Proposed new rules for equal pay

A revised draft law on equal pay was presented at the beginning of October 2016. The introduction of such a law is disputed between social partners: the unions claim it is necessary while some employers reject that argument. The draft states that employees in companies with 200 or more employees will have the right to inquire about possible pay differences between men and women. Companies with 500 staff or more would also be required to report on measures to guarantee gender equality.

The Federation of German Employers’ Associations in the Metal and Electrical Engineering Industries (Gesamtmetall) and the German Confederation of Employers’ Associations (BDA) have welcomed the changes in the latest draft. On 6 October, both Gesamtmetall and BDA issued press releases expressing their satisfaction that no new reporting duties had been introduced for companies bound by a collective agreement, as collectively agreed wages and pay scales did not acknowledge gender pay differences. Nonetheless, Gesamtmetall also stressed that the law would not change the reasons for gender pay differences.

In contrast, the trade unions argue that collectively agreed pay scales should have be examined with regard to gender bias and that more transparency is needed at company level in order to tackle the gender pay gap, which currently stands at an unadjusted figure of 21.6%.

AfD wins more parliamentary seats

In the political arena, the rise of the right-wing party Alternative für Deutschland (AfD) continued. At the beginning of September 2016, two elections took place at federal level. The AfD won seats in two federal states’ parliaments, after gaining 20.8% of the votes in Mecklenburg-Western Pomerania and 14.2% in Berlin. In both elections, the Social Democratic Party and the Christian Democratic Union lost seats.

AfD’s success is linked to the party’s condemnation of Chancellor Angela Merkel’s refugee policy, which has faced criticism from both inside and outside her party. At the end of August 2016, the Chancellor admitted that many problems concerning refugees had been ignored for too long and that a European solution should have been brought about much earlier. The next federal elections at national level are little more than a year away.

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