Court ruling abolishes minimum wages in postal services sector

At the end of January 2010, the Federal Administrative Court declared that the previous German government’s decree on mandatory working conditions for mail delivery services was deficient. The latest ruling ended an ongoing dispute on the lawfulness of the introduction of minimum wages in the postal services sector. It provoked, however, a heated debate among the social partners.

At the end of December 2007, the previous German centre-right left-wing coalition government issued a decree on mandatory working conditions for mail delivery services. The decree enabled the government to introduce a national minimum wage for large parts of the mail delivery services which were included in the Posted Workers Act (Arbeitnehmer-Entsendegesetz, AEntG) (DE0712039I).

Minimum wage levels

The minimum wages thus introduced, ranging from €8.00 to €9.80 an hour, stemmed from a collective agreement negotiated between the United Services Union (Vereinte Dienstleistungsgewerkschaft, ver.di) and the Postal Services Employers’ Association (Arbeitgeberverband Postdienste e.V., AGV Postdienste). The latter is dominated by the market leader Deutsche Post AG. This agreement was declared generally binding, while other collective agreements also existed in the sector at that time.

For example, at the end of 2007, the Federal Association of Courier and Express Postal Services (Bundesverband der Kurier-Express-Post-Dienste, BdKEP) had negotiated a collective agreement with the Union for the New Postal and Delivery Services (Gewerkschaft der Neuen Brief- und Zustelldienste, GNBZ). Their collectively agreed minimum wage was lower than the one negotiated by ver.di and AGV Postdienste and adopted by the government with effect from 1 January 2008.

Court ruling and its impact

In the aftermath of the court ruling, the competitors of Deutsche Post – the Pin Group, TNT Post and BdKEP – had challenged the government’s decree in court. On 28 January 2010, in the latest court proceedings in this regard, the Federal Administrative Court (Bundesverwaltungsgericht, BVerwG) issued a ruling (in German) which decided the ongoing dispute on the lawfulness of the government’s decree in favour of the plaintiffs (DE0901029I).

In detail, the highest federal court ruled that the federal government had infringed the rights of the plaintiffs by not hearing them out. Before issuing the decree, the government had not given all employers, employees and partners to a collective agreement in the affected sector sufficient opportunity to present their positions in a written statement.

On 28 January 2010, a spokesperson for the court explained in the weekly magazine Spiegel that the latest decision of the court only affects the plaintiffs, who as a result do not have to pay the minimum wages laid down by the government decree. According to an article (in German) published in the magazine, all other private mail deliverers, however, have to adhere to the decree until it expires at the end of April 2010. In this context, Spiegel quoted the Chair of Pin Mail, Axel Stirl, who emphasised the company’s intention to return immediately to the former wage level of €8.50 an hour. The latest court decision also stirred a heated debate among the social partners.

Reactions of social partners

On 28 January 2010, the President of the Employers’ Association of the New Postal and Delivery Services (Arbeitgeberverband Neue Brief- und Zustelldienste, AGV NBZ), Florian Gerster, declared in a statement (in German) that the court’s decision was ‘a victory for competition for the mail delivery services’. The competitors of Deutsche Post who had united in AGV NBZ now had legal security, which would lead to greater investments and the creation of new jobs. Mr Gerster highlighted the fact that the employees of the association’s member companies remained covered by the hourly minimum wage of €7.50 in western Germany and €6.50 in eastern Germany laid down in the collective agreement that AGV NBZ had negotiated in December 2007.

On the same day, the President of the German Confederation of Employers’ Associations (Bundesvereinigung der Deutschen Arbeitgeberverbände, BDA), Dieter Hundt, also welcomed the court’s decision. In a press release (in German), he highlighted the fact that the introduction of a statutory minimum wage had led to the loss of several thousands of jobs in the sector. On 3 February 2010, the business daily Handelsblatt furthermore quoted Mr Hundt and his view that the minimum wage was an illicit attempt to squeeze competitors out of the market.

On the other hand, in a statement to the press (in German), the Vice-President of ver.di, Andrea Kocsis, called on the federal government to issue a new, improved decree and to reintroduce the minimum wage for mail delivery services. With the defects removed, a minimum wage for mail delivery services was the appropriate means to prevent unfair pressure on wage levels in the sector. Ver.di stated that it would stick to the minimum wages negotiated by the union and AGV Postdienste in September 2007 – ranging from €8.40 to €9.80 an hour) for some 200,000 employees in the sector.

A board member of the Confederation of German Trade Unions (Deutscher Gewerkschaftsbund, DGB), Claus Matecki, also commented on the latest court decision. He stated in a press article (in German) that the minimum wage for the mail delivery services was still necessary to protect employees from unfair pressure on wages. He argued that competition had to be based on quality of service and not on ever lower wages.

Commentary

Finally, it is worth noting that, in a press statement (in German, 34Kb PDF) in 2009, the local labour court in Cologne ruled that GNBZ lacked the capacity to conclude collective agreements.

Sandra Vogel, Cologne Institute for Economic Research (IW Köln)

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