Germany: Latest working life developments Q3 2018

The current labour market situation in Germany, the government’s planned skilled labour migration act and other reforms 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 2018.

New government to tackle labour market weaknesses

The slow growth of the German economy continued into the third quarter of the year, with GDP increasing by 0.5% and the number of people in employment growing by 1.3% on the previous year. As of July 2018, the unemployment rate stood at 3.4%.^[1] Labour shortages are high on the agenda of employer organisations, particularly those in the health and elderly care sectors.

On the other hand, a number of long-standing labour market problems persist:

• The number of unemployed people still stands at 1.4 million, with another 1 million taking part in labour market activation measures.
• Numerous school leavers are still unable to find an apprenticeship position, despite vacancies.
• 69% of all working mothers work part time (along with 6% of working fathers) because structural impediments prevent them from working more hours.

The new government, consisting of the Christian Democrats (CDU)/Christian Social Union (CSU) and the Social Democrats (SPD) has proposed two new initiatives to respond to this situation: one targeting existing labour market reserves and the other aimed at improving access to the labour market for foreign workers. A holistic labour strategy for skilled national, European and international workers is also being developed in cooperation with social partners, and is due to be presented in 2019.

Support for unemployed people and new mothers

To tackle unemployment, Minister of Labour and Social Affairs Hubertus Heil has proposed more wage subsidies for companies that employ long-term unemployed people for at least 30 months.^[2] Up to 75% (first year) or 50% (second year) of the wage will be subsidised in this case.

To reach out to mothers with young children, Federal Minister of Family Affairs, Senior Citizens, Women and Youth Franziska Giffey, plans to invest €5.5 billion (until 2022) in improving childcare. Part of this plan includes the Good Kita Act, which was passed by the federal cabinet in September. The Act will subsidise families that make use of childcare facilities (Kindertagesstätten), depending on financial need, and also aims to improve working conditions for childcare workers.^[3]

To address the labour market shortage in the care sector, the ministries for labour, family and health initiated a ‘Joint action on care work’ (Konzertierte Aktion Pflege) aimed at improving ‘recognition, working conditions and wages’ in the sector.^[4] The action will gather various stakeholders together to develop concepts in areas such as training, occupational safety and health, innovative and digital forms of care, foreign care workers and wage development. These concepts will be developed up to mid-2019.

Reducing barriers for skilled migrant workers

Under the guidance of the Federal Ministry of the Interior (headed by the CSU), the Federal Ministry of Economics and Technology (CDU) and the Federal Ministry of Labour and Social Affairs (SPD) are developing legislation to facilitate access to the labour market for skilled third-country nationals with a job offer.^[5] A draft paper ^[6] (Eckpunktepapier) of the planned ‘Skilled labour migration act’ (Fachkräftezuwanderungsgesetz) was presented in the third quarter of 2018 and is still under debate, with the draft legislation due to reach parliament by spring 2019.

The act proposes that employers will be able to fill vacancies with skilled third-country nationals without the Federal Employment Agency having to check if the position can be filled by a European worker first. However, the third-county nationals must meet certain selection criteria, including possessing a qualification similar to the one required, having suitable linguistic capacity and being of an appropriate age. Whether asylum seekers with an apprenticeship contract or an employment contract will be permitted to ‘change track’ and immigrate as skilled third-country workers is still up for debate.

The Confederation of German Employers’ Associations (BDA) is fully aware of the need for the legislation, takes a liberal stance and calls for the bureaucratic barriers preventing access to the labour market to be reduced. ^[7] The Central Association of German Crafts (ZDH) supports the track change for asylum seekers.^[8]  The German Trade Union Confederation (DGB) also supports the track change, but remains sceptical about the elimination of the initial check by the Federal Employment Agency. ‘Wage dumping’ and poor working conditions for migrant workers can best be avoided by controlling the working conditions of the vacancies.^[9]