EMCC European Monitoring Centre on Change

Employer groups

Germany
Phase: Anticipation
Typ:
  • Fostering mobility
  • Matching/Networking
  • Support of SMEs
  • Territorial coordination
Senast ändrad: 03 August, 2021
Lokalt namn:

Arbeitgeberzusammmenschlüsse (AGZ)

Engelskt namn:

Employer groups

Coverage/Eligibility

Micro, small and medium-sized enterprises.

The measure is implemented in various regions; in some cases starting phase supported by public funding.

Main characteristics

Several employers (private, public or NGOs) may form an employer group. The new entity will then be able to:

  • provide participating firms with qualified and reliable staff at a reasonable cost;
  • jointly finance vocational training and further training;
  • secure employment of workers at risk of dismissal because of poor economic prospects of a member company;
  • improve the economic development of the participating firms and that of the region by helping to provide better flexibility, anticipation, strategy and innovation skills, expansion and diversification potential (AGZ Infozentrum, 2013; Osthoff et al, 2011). 

Employer groups (so-called AGZ) are typically established either by micro business and SMEs or are result of a regional, sectoral collective agreement concluded by the metalworkers union IG Metall and several regional employers of the metal and machinery sector (labour pools). The establishment is often preceded by a feasibility study to investigate regional demand for an AGZ and the feasibility of combining different employers' need for labour.

The subsequently created AGZ pool forms a separate legal entity; it employs workers who engage with more than one company that is a member in the group. Workers are recruited on the basis of an assessment of the needs of each member company, taking into account individual working hours. Member companies have to guarantee these hours and pay for these. In general, each worker has between two and four jobs per year, either on a seasonal or continuous basis. Contractual relations with the employer remain intact, and wages (which are guaranteed to be of the same level as those of core staff) continue to be paid.

In addition to the provision of workers, the AGZ might also aim at sharing other services between member companies such as the financing and organising of further training measures, of vocational training or the administration of core staff.

The metalworkers union IG Metall has in times of economic crisis promoted the establishment of employer groups by settling collective agreements on the issue. This in particular was the case in the Ruhr region and in the region of Siegen (North Rhine Westfalia).

Funding

  • Employer
  • Companies

Involved actors

National government
Pilot project and feasibility studies supported
Regional/local government
Pilot project and feasibility studies supported by regional governments
Employer or employee organisations
Trade unions
Övriga

Effectiveness

As of March 2019, there is only one AGZ in Germany, with 4 participating firms and 3 shared workers (latest available data). While there were six AGZ with 142 participating firms and 69 shared workers in May 2018, all but the AGZ Harz-Weser have ceased operations. The change is due to the implementation of the EU Directive on Temporary Agency Work into national law, which has changed the environment for AGZ and their main objectives. The EU directive wants to provide minimum protection for temporary agency workers whilst at the same time allowing the sector to grow. In Germany, the directive was implemented, and significant changes followed suit: In 2011, the possibility to declare a minimum wage level as generally binding and a right for equal working conditions for temporary agency workers and permanent staff were introduced. In 2017, the maximum loan period for temporary agency workers was restricted to 18 months (deviations by collective agreements are possible). In addition, temporary agency workers were granted the right to receive equal wages like permanent staff after 9 months of work for the same client company. 

Strengths

This scheme provides participating firms with an additional instrument for managing cyclical and seasonal variations in demand. It provides workers with employment security and guarantees the same wages as those of core staff in the member companies. A feasibility study to be conducted prior to implementation or during the start-up phase is recommended. The scheme provides companies with skilled and continuously trained workers who are benefiting from different work experiences and high adaptability. In contrast to temporary work agencies, the AGZ does not aim at making a profit, hence companies only have to cover wage and administration costs, but no agency fees.

Macro level

According to several studies (AGZ Südbrandenburg, 2013; AGZ Infozentrum, 2013; Hartmann, 2012; Kratz and Böcker, 2010; Tamen, 2009; Wölfing et al, 2007; Hertwig and Kirsch, 2013; Osthoff et al, 2011; Hartmann and Meyer-Wölfing, 2008) AGZ have benefited their regions in several ways, through:

  • indefinite full-time jobs and the retention of skilled labour, providing regions with a competitive advantage;
  • improved working conditions due to employers’ influence on each other and the implicit obligation for employers to provide similar working conditions to remain attractive within the AGZ;
  • skills development in the region due to enhanced on-the-job learning opportunities;
  • effective support of small enterprises in accessing skilled labour;
  • improvement of ‘soft factors’ determining the attractiveness of the region as a business location or place to live (AGZ initiate discussions on the availability of education/training infrastructure, leisure centres, and care facilities with regional policymakers);
  • labour market integration of disadvantaged groups for whom individual employers would like to provide jobs out of social responsibility, but cannot afford to do so on their own.

Micro level

There are also several advantages that AGZ can offer to companies from a micro perspective (AGZ Südbrandenburg, 2013; AGZ Infozentrum, 2013; Hartmann, 2012; Kratz and Böcker, 2010; Tamen, 2009; Wölfing et al, 2007; Hertwig and Kirsch, 2013; Osthoff et al, 2011; Hartmann and Meyer-Wölfing, 2008):

  • distribution of employment risk across participating companies;
  • cost of employment kept below that of temporary agency workers, not least because of the non-profit character of the AGZ;
  • increased competitiveness (in case of sudden large orders core staff can be flexibly supplemented by AGZ workers who are already familiar with the company and its working procedures);
  • familiar workers mean shorter induction periods;
  • access to qualified specialists for strategic part-time activities, such as quality management, marketing, IT;
  • access to and awareness of professional strategic HR management;
  • access to tailor-made qualification measures and distribution of education/training;
  • costs across participating companies;
  • high motivation and commitment of workers;
  • image as a responsible and attractive employer;
  • cooperation with other companies, also beyond the shared workforce (such as joint use of machinery, shared purchases, acquisition of clients).

The same studies show that AGZ can offer workers:

  • job creation and avoidance of overtime as tasks going beyond normal working hours can be shifted into a new post;
  • integration into the regular labour market, particularly for people who might be considered as risky by employers due to an assumed high chance of failure of the employment relationship (such as the long-term unemployed);
  • establishment of full-time indefinite employment with a single employer (the AGZ);
  • equal treatment with core staff on income, working conditions and participation;
  • access to flexible working arrangements, facilitating the combination of family obligations and work;
  • access to education/training measures, also fostering career development of the workers and their employability on the labour market.

Weaknesses

There is a low level of awareness and familiarity with AGZ among companies. No legal framework has been made available yet; currently they are treated as temporary work agencies which results in several problems:

  1. Farmers bear higher administration costs for AGZ employees in comparison to other branches.
  2. It is difficult to set up an AGZ for the construction sector.
  3. A certain organisational and financial capability is needed to set up an AGZ (solo-entrepreneurs with low-level income are found to have difficulties organising an AGZ).

Previous examples show that setting up an AGZ with an external initiator (i.e. one that is not part of the AGZ) proves difficult (lack of identification and involvement of member companies with the AGZ). Member companies need to share the same goal and must have analysed and defined their need for labour very well.

To allow more AGZ to be set up, a more defined legal framework is needed including features such as legal status and taxation and more systematic public support for the start-up and development phase.

  • AGZ workers can be dissatisfied with their income because of the variations in salary linked to the specific job performed in a certain period;
  • AGZ workers can become unhappy when changing from one company to another due to different working conditions;
  • AGZ are often too small to cover training and education needs.

Exempel

AGZ Südbrandenburg which covers 40 establishments and employs 43 employees.
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