Germany: Latest working life developments – Q2 2017

Economic stability, campaigning ahead of September’s elections, new policies on pay and working hours, a decline in union membership, changes to the collective bargaining landscape and a reduction in strike action are the main topics of interest in this article. This country update reports on the latest developments in working life in Germany in the second quarter of 2017.

Economic stability and job creation

Germany’s economic stability continued in the first quarter of 2017, with the price-adjusted German domestic product (GDP) rising by 0.6 %, compared to 0.4% in the fourth quarter of 2016. Unemployment reached a low of 5.6% in May 2017, a 26-year record low. At the same time, the shortage of skilled professionals is becoming a major issue. While the Federal Employment Agency (BA) is expecting 667,000 vacancies to be filled (PDF) this year, the Association of German Chambers of Commerce and Industry (DIHK) expects only around 500,000 vacancies to be filled due to a shortage of skilled labour in the country.

Political campaigning ahead of federal elections

Six months before the federal elections in September 2017, two elections at federal state level led to unexpected losses by the ruling Social Democratic Party (SPD), handing over to new government coalitions. In the state of North-Rhine Westphalia, the SPD and the Greens had to step down; the new government is now formed by the Christian Democrats (CDU) and Liberals (FDP). In the state of Schleswig-Holstein, the CDU, Greens and FDP have formed a new coalition.

In their election programmes, the CDU and its Bavarian sister party Christian Social Union (CSU) state that they aim to reduce the German unemployment rate to below 3 % and to draft a law for skilled worker immigration in the next term of office. The SPD, on the other hand, aim to address social inequality and put greater focus on improving pensions and employee protection: for example, the party wants to end the termination of fixed-term contracts without a reason being given.

New policies on pay and working hours

A new act on wage transparency at establishment level (Entgelttransparenzgesetz) has been in force since 6 July 2017. In 2016, Katarina Barley, Federal Minister of Family Affairs, Senior Citizens, Women and Youth, drafted an act aimed at reducing the gender pay gap of some 21%. However, it created controversy among social partners. The new act stipulates that – in establishments with more than 200 workers without worker representation – workers may ask for information on the remuneration structure in the establishment to negotiate higher wages. In establishments with a works council, the worker representatives can ask for the information on behalf of the worker.

Andrea Nahles, Federal Minister for Labour and Social Affairs, failed to introduce a new law on greater working time flexibility. The draft law had given workers the legal right to return to a full-time position after having worked part-time for a certain period of time – for example, parents who had reduced their working time to care for children or workers caring for relatives. Unions welcomed this reform on part-time work; however, employers criticised the reform.

Decline in trade union membership

The Confederation of German Trade Unions (DGB) released its 2016 membership figures, which show a decline in membership from 6,095,513 in 2015 to 6,047,503 in 2016. According to data, six out of eight DGB affiliates lost members; however, the metalworkers’ union (IG Metall) and the police union (GdP) reported increases in membership.

In December 2016, Germany’s second largest union confederation, the German Federation of Civil Servants (DBB) reported a membership increase – from 1.29 million to 1.31 million. Meanwhile, the third-largest union confederation, the Christian Trade Union Confederation (CGB), reported no change in membership at around 280,000 members. 

Changes to the collective bargaining landscape

According to figures released by the Institute for Employment Research (IAB), 48% of employees worked in companies with a sectoral collective agreement in 2016, another 11% of employees in eastern and 8% in western Germany are covered by a company collective agreement. In the last 20 years, these figures have reduced considerably from 70% to 51% in western Germany from and 56% to 36% in eastern Germany. However, the decline in collective bargaining coverage has slowed down. Between 2015 and 2016, the proportion of sectoral and company-level agreements remained unchanged in western Germany and each dropped by just one percentage point in eastern Germany.

In the chemical sector, the social partners IG BCE and Nordostchemie concluded a new sectoral agreement for north-eastern Germany, which decentralises negotiations on working time (IG BCE also announced the agreement in its press release). The agreement creates significant changes for trade unions, while also seting an overall reduction of weekly working time by 90 minutes. Companies can now negotiate with their works councils’ on weekly full-time working hours of between 32 and 40 hours. Working time can be set for the whole company, for single business units, or specific groups of employees. The agreement also introduces the option of negotiating individualised working time schemes for employees. The agreement is set against a background of an ongoing public debate on the regulation of working time.

In the retail, mail order and e-commerce sector, trade union ver.di has started campaigning for an extension of the sectoral agreement. The application of the sectoral agreement is in decline as competition by US giant Amazon and e-commerce is a growing risk to small businesses. Several large companies back ver.di’s campaign.

Reduction in the number of strike days

In 2015, difficulties in reaching collective agreements in the services sector resulted in an exceptionally high number of lost working days. In 2016, according to strike statistics from the German Institute for Economic and Social Research (WSI), the number of lost working days due to strike action was about the same level as in the years from 2011 to 2014. The WSI figures show that reaching company sector agreements in the health care sector was particularly difficult, while the most days lost due to strike action were in the metal and electrical sectors, and in the public sector. However, official strike statistics from the Federal Employment Agency (BA) show that the number of working days lost due to strikes and lockouts declined by 80% in 2016 compared to 2015.

Commentary

No new developments in industrial relations are expected over the summer. It is, however, expected that political debate will become more controversial in the run-up to September’s federal elections.

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