LABOR MARKET | 28.02.2011

Industry and unions face off over temp workers

 

German carmakers are big users of temporary workers

Business is booming at temporary employment agencies as German firms seek greater flexibility in hiring and firing. But critics complain that workers with equal qualifications deserve equal treatment - and pay.

 

Germany has moved from being one of Europe's most highly regulated labor markets to one of its most liberalized – with all the advantages and disadvantages that status entails.

A prime example is temporary employment. Business leaders say temporary work is needed to cope with peaks in production and that it has contributed to Germany's growing competiveness in international markets in recent years.

Unions, by comparison, argue that current temporary employment practices exploit vulnerable workers.

Since the German labor market was deregulated in 2004, the number of temporary workers has risen by nearly 140 percent, reaching 900,000 earlier this year. And although these workers still account for less than 3 percent of all positions requiring contributions to the social insurance system, they're clearly in growing demand.

Hire and fire

More than one third of the two million job vacancies last year were filled by temporary employment agencies, according to the German Federal Employment Agency.

Agency workers, or "temps," as they are commonly called, can be hired and fired more easily than full-time employees and often earn less. On average, a full-time employee in the western part of Germany earns gross pay of 2,800 euros a month, compared with less than 1,500 euros for a temp, according to the Confederation of German Trade Unions (DGB). The numbers are slightly lower for workers in the eastern half of the country.

Former Chancellor Schröder (right) and Peter Hartz deregulated labor marketsMost temps aren't happy with the disparity. Matthias Gumpert, a 34-year-old mechanic, is one of them.

"I usually get about five to seven euros an hour," Gumpert said, explaining that's about half of what full-time workers in his sector make. "I'm just as qualified as they are and, in most cases, do the same job as they do. I feel my work isn't appreciated enough, which is frustrating."

Many temps don't earn enough to make ends meet and often end up receiving financial support from the state – to the tune of 500 million euros last year.

Some changes are on the horizon. The German government has approved a minimum wage of nearly eight euros, which could be introduced in May. Berlin has taken this move largely to protect German employees against an influx of cheap labor once workers from Eastern Europe gain access to job markets in Western Europe on May 1.

'Wage dumping'

Whether the government will approve equal pay for temporary workers, as demanded by German unions, is another story, however.

"If the minimum wage were the first step toward equal pay, we would be totally behind this move," said Jörg Köther, a spokesman for German labor union IG Metall. "But this looks more like the last move this government will make and that's wrong."

Skilled workers will be in growing demand as Germany confronts an aging workforceKöther argues that German industry isn't as interested in flexibility as it is in cheap labor. "Temporary work in Germany is nothing more than a 'wage-dumping' exercise," he said.

On February 24, IG Metall organized a "national day of action" to draw public attention to the plight of temporary workers in Germany and garner support for government intervention.

While temporary work is popular in many other European Union member states, workers there enjoy better conditions, according to Professor Gerhard Bosch, a labor expert at the University of Duisburg-Essen.

"Equal pay is a normal situation in the EU," he told Deutsche Welle. "Germany is the exception."

Pseudo labor unions

While the EU Agency Worker Directive has established rules to protect temporary workers, including equal pay, it also allows exceptions, according to Bosch. In Germany's case, he says, it's the collective wage agreement.

German labor unions want equal pay for equal work"Temporary recruitment agencies have taken advantage of this loophole by negotiating agreements with pseudo labor unions like the CGZP, which offers dumping wages," he said. 

Although companies will increasingly compete for skilled workers in an aging workforce, they will continue to rely heavily on temps – to remain flexible and save money, according to Bosch. He expects the temp market in Germany will grow to 2 million workers over the next few years.

But equal pay will remain a prickly issue. The Federal Association of Temporary Personnel Services (BZA) and some employers, including members of the German machine-tool association VDMA, argue that an equal pay rule could disrupt Germany's recovering labor market.

"It will cost tens of thousands of jobs in Germany, especially in the auto sector," said BZA spokesman Michael Wehran. "

Author: John Blau
Editor: Sam Edmonds

 

 

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