Bundesrat rejects law on collectively agreed pay in public procurement

In July 2002, the Bundesrat - the second chamber of Germany's parliament, representing the federal states' governments - rejected a government bill which would have obliged companies seeking to obtain public contracts in construction and local public transport to pay their employees collectively agreed wage rates.

On 12 July 2002, the Bundesrat- the second chamber of parliament, representing the federal states' (Länder) governments - rejected the government's bill for a 'law on collectively agreed pay in public procurement' (Gesetz zur tariflichen Entlohnung bei öffentlichen Aufträgen). More than two months previously, on 26 April, the Bundestag- the first chamber of parliament - had adopted the bill. While in the Bundestag, the ruling coalition of the Social Democratic Party (Sozialdemokratische Partei, SPD) and Alliance 90/The Greens (Bündnis 90/Die Grünen) hold a majority of the votes, the opposition parties - the Christian Democratic Party (Christlich Demokratische Partei, CDU) and the Free Democratic Party (Frei Demokratische Partei, FDP) - have a majority in the Bundesrat.

After the Bundestag-Bundesrat mediation committee (Vermittlungsausschuss) failed to reach a compromise, the majority of the federal states' governments led by CDU and FDP finally rejected the 'red-green' federal government's bill. This means that the federal government will have to start a completely new legal initiative if it wants a law on this issue.

In December 2001, the federal government presented the bill for the so-called 'Tariftreuegesetz' ('Law on loyalty to collectively agreed standards'), whereby public contracts should be awarded only to those companies which declare that they pay wages in line with those collective agreements which are applicable at local level (DE0201202F). The new law would have affected all public contracts in the areas of construction and local public transport.

While the majority of German employers' associations had always refused the idea of a 'Tariftreuegesetz' and therefore welcomed the Bundesrat's decision, it was sharply criticised by the trade unions. On 31 May 2002, the trade unions in construction and local public transport, the Building, Agriculture and Environment Union (IG Bau-Agrar-Umwelt) and the Unified Service Sector Union (Vereinte Dienstleistungsgewerkschaft, ver.di), organised a demonstration with more than 20,000 participants to support the adoption of the 'Tariftreuegesetz'.

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