Temporary agency workers granted national minimum wage

National minimum wages for temporary agency workers came into force on 1 January 2012, setting a minimum hourly wage of €7.89 in western Germany and €7.01 in eastern Germany, including Berlin. Rates will increase to €8.19 in the west and €7.50 in the east from 1 November 2012. They apply to all temporary agency workers in Germany regardless of their employer’s country of origin. Around 900,000 workers are estimated to be covered by the decree, which expires on 31 October 2013.

Background

On 20 December 2011, Germany’s Federal Cabinet agreed to include the temporary agency work sector in the Posted Workers Act (AEntG) so that the minimum hourly wage scale (in German, 37Kb PDF) could apply to these workers. The Posted Workers Act stipulates that minimum wages can only be declared binding by decree of the Federal Ministry of Labour and Social Affairs (BMAS), when agreed independently by the bargaining parties through collective wage agreements.

The extension of collectively agreed minimum wages to temporary agency work was the subject of heated debate in 2008 (DE0807019Q). At that time, competing collective agreements existed in the sector. The former German Association of Private Employment Agencies (BZA) and the Association of German Temporary Employment Agencies (iGZ), together with the DGB – the bargaining association of all trade unions affiliated to the Confederation of German Trade Unions – asked to be covered by the Posted Workers Act. The grand coalition government of the time failed to reach consensus about the legality of granting the application after it was opposed by the former Employers’ Association of Medium-Sized Personnel Service Companies (AMP) and the CGB – the bargaining association of all trade unions affiliated to the Christian Federation of Trade Unions. They were strongly against the introduction of minimum wages through the Posted Workers Act.

In April 2011, the BZA and AMP merged to form the new Federal Employers’ Association of Personnel Service Providers (BAP). The merger paved the way for a renewed application from the social partners for the extension of the Posted Workers Act. On 17 November their proposal was submitted to the Federal Ministry of Work and Social Affairs (BMAS) and published in the Federal Register.

Reactions

In a press statement (in German) on 20 December, the Secretary for Labour and Social Affairs, Ursula von der Leyen, declared that the decree would protect temporary agency workers against competition from foreign agencies paying excessively low wages, and strengthen the bargaining power of unions and employers associations. She also asked the social partners to agree on how long agency staff must work before they receive the same pay as regular employees.

On 16 February 2012, the President of the Confederation of German Employers’ Associations (BDA), Dieter Hundt, said in a statement (in German, 86Kb PDF) that negotiations should be held exclusively between unions and employers’ associations in the temporary agency work sector on the gradual adjustment of agency workers’ wages to the level of comparable workers in the user company.

Claus Matecki, a member of the DGB board, said in a press release (in German) that the introduction of minimum wages was an overdue step towards combating downward pressure on pay from foreign agencies. He further reiterated the unions’ intention to pursue the strict adoption of equal pay for temporary agency workers.

The national minimum wages for temporary agency workers will increase to €8.19 in western Germany and €7.50 in the east from 1 November 2012. According to the latest figures from the Federal Employment Agency (BA), in June 2011 around 900,000 workers were estimated to be covered by the decree. This will expire on 31 October 2013.

Oliver Stettes, Cologne Institute for Economic Research (IW Köln)

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