Employees in collectively negotiated firms earn more, although collective bargaining coverage is dropping in Germany. The ruling coalition intends to take counter-measures. Bremen demonstrates how to provide an incentive for businesses to get into collective bargaining agreements.
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| Collective Bargaining in Germany |
Falling collective bargaining agreements are a trend not only in Germany, but across the European Union. Chancellor Olaf Scholz stated at the 15th Congress of the European Trade Union Confederation in Berlin at the end of May that the passage of the minimum wage regulation at the EU level was a significant step, but not sufficient.
Employees are earning less
It is now critical for him "that we increase the collective bargaining agreement again," he stated. Good collective bargaining agreements demonstrate respect for employee performance, which is why expanding collective bargaining coverage is critical. In reality, since the 2000s, collective bargaining coverage in Germany has been progressively dropping.
The Hans Böckler Foundation's Economic and Social Science Institute (WSI) conducted research.According to the research, just 52% of employees may rely on collectively negotiated rights in 2021, down from 68% in 2000. The causes for the drop are various, according to the report on collective bargaining in federal states: There is a lot of discourse about economic structural change, namely a movement in employment from major industrial enterprises to smaller entities in the service sector.
While the proportion of jobs covered by collective bargaining agreements in federal states such as Bremen, North Rhine-Westphalia, Rhineland-Palatinate, or Hesse remains between 59 and 55 percent, Mecklenburg-Western Pomerania, Saxony, Brandenburg, and Thuringia are only slightly higher at 41 to 46 percent. With obvious drawbacks for staff.
According to another WSI survey, full-time employees in firms without a collective agreement work an additional 54 minutes per week and earn 11% less than employees in organizations with a collective agreement.
Bremen: Tariff loyalty and procurement law since 2002
Scholz mentioned the government coalition's goal to increase collective bargaining autonomy, collective bargaining partnership, and collective bargaining coverage at the trade union congress in this context.
According to the coalition agreement, the SPD, Greens, and FDP aim to attach federal government public procurement to a collective agreement. Bremen, the federal state, is a pioneer in this field. In this country, a legislation governing tariff loyalty and procurement was enacted in 2002. However, it only extended to the construction industry and local public transportation until the beginning of this year. It mandates that public contracts be allocated exclusively to enterprises who comply with collective bargaining agreements.
"The collective agreement is a protective shield for the employees," explains Marion Salot of the Bremen Chamber of Labor. The statutory minimum wage is beneficial, but "collective agreements are preferable." While a statutory minimum wage sets a lower limit to prevent wages from sliding freely, collective agreements are meant to contribute to social security for employees so that they may live comfortably on their salary while also receiving an acceptable pension. According to studies, people who work in organizations governed by collective bargaining agreements are happy since a fair and enforceable framework has been established."
Since the 2000s, collective bargaining coverage in Bremen has been rapidly diminishing. The Collective Bargaining and Public Procurement Act assures that "no companies that can make a more attractive offer at the expense of lower wages are financed with public money," the economist argues.
In other words, it is meant to avoid "wage dumping supported by public funds, where you may then be forced to assist with citizen benefit payments." She applauds the government's decision to expand the legislation to the service industry. Companies have been required to pay collective salaries for all public construction and service contracts since January 2023.
The low threshold values at which it takes action are also advantageous. The Collective Bargaining and governmental Procurement Act may apply to a considerable portion of governmental contracts. The regulation applies to service contracts starting at 3,000 euros and construction contracts starting at 5,000 euros.
According to Salot, every administration should prioritize collective bargaining and social collaboration. "Of course, as a client, you have some demand power that you must use." Collective bargaining agreements have social value as well, for example, by ensuring the idea of "equal pay for equal labor" and so assisting in closing the pay gap between men and women."
It is critical that this law be applied at the federal level as well. The message is simple: "If I don't pay according to the tariff, I can't apply for public contracts, and then I'm out." Companies should be encouraged to get into collective bargaining agreements as a result of this. This is the glimmer of optimism."
Source: Vera Rosigkeit/Vorwarts