Reforming the German labour market: the case of temporary agency work

Abstract

Germany is known as one of the countries where the collective representation of interests through associations (‘corporatism’) is particularly strong. However, after the tripartite Alliance for Jobs, Training and Competitiveness failed to agree on solutions for combating high unemployment, an independent commission established by the government (the ‘Hartz commission’) has currently set the agenda for labour market reform. This article addresses the question of whether these events signal the end of corporatism in labour market policy in Germany. An analysis of temporary agency work, an atypical form of employment addressed by the Hartz reforms, shows that fundamental reform in Germany must be initiated outside the system of tripartite interest negotiation. However, the implementation of such reforms depends on the traditional structures of interest negotiation between the social partners.

Keywords:

• Corporatism
• Tripartism
• Labour market policy
• Temporary agency work
• Trade unions

Acknowledgements

This article was written in the context of a research project on Employment Change in Japan and Germany at the Department of Sociology and the Institute of East Asian Studies at the Duisburg-Essen University (principal investigator Karen Shire), which is funded by the Deutsche Forschungsgemeinschaft. The research reported here is based on expert interviews conducted between 2002 and 2004 with trade unionists, representatives of employer associations, managers in temporary work agencies, and members and scientific assistants of the Hartz Commission of the German government.

Notes

In fact the statistical data show that the standard employment relation is gradually becoming relatively less significant. The percentage of persons active in the labour market who were working full time with unlimited contracts decreased from 66.7 percent in 1985 to 54.3 percent in 2002. In the same period there was an increase in the proportion of atypical employment forms, such as part-time work (10.6% to 23.1%), limited term employment (6.0% to 7.0%) and temporary agency work (0.2% to 0.9%) (own calculations based on Statistisches Bundesamt data), which has led to increasing diversity in the employment system. However, even though the significance of the standard employment relation has decreased in relative terms, the absolute number of jobs covered by this form has remained constant. It appears that, for the most part, new jobs using atypical employment forms were created, instead of standard employment relations being transformed into atypical forms (Hoffmann & Walwei 1998: 419; Kress 1998; Bosch 2002: 127; Schmid 2002).

The political complexion of the FDP changed significantly in 1982. The party wing which focused on individualistic and secular values, which preferred co-operation with the SPD and distance from the Christian CDU/CSU, lost influence, relative to economic liberals, who saw more common interests with the conservatives. This shift contributed to policy changes within the FDP regarding temporary work.

The Greens were represented for the first time in the German parliament in March 1983.

These are wage payments during times when a temporary employee cannot be dispatched, with the intended effect of establishing a long-term employment relationship for temporary workers with their agencies.

The type of temporary work practised in the USA or partly in Japan is not the dominant form in Germany. Temporary agency workers are unlimited-term contract employees of their agencies.

A time period of at least three months must lie between termination of employment and the re-hiring of a temporary worker.

The synchronization prohibition rules out the practice of hiring temporary agency employees by temporary help firms for only the duration of the first assignment. As a result, temp agencies are not able to escape their responsibilities as employers of temporary workers during periods when they cannot be dispatched, i.e. when there is no work available for them. Agencies must dispatch their temporary employees to a second client, or receive pay without assignment, for at least 25 percent of the time they worked at the first client before the employment relation with the agency can be terminated.

The DGB trade unions feared that ‘low-wage collective agreements’ would be negotiated, leading to wage dumping, either through competing non-DGB unions or because of low union membership among temporary workers (DGB 2001: 3). The IGZ employer association was prepared to negotiate, but the largest association at that time, the BZA, was not interested in collective bargaining despite the possibility of engaging in negotiations as an alternative to state regulations. Neither in public accounts nor in the author's interviews with the BZA has the association given a reason for the refusal to negotiate. It can certainly be assumed, however, that the BZA, like the DGB member unions, considered the legal regulations more efficient than their taking on responsibility for reaching collective agreements, which always involve large investments of resources and effort.

The federal budget office examined the placement records of five local labour exchange offices in October 2001. Of the 4,487 placements reviewed, 640 could not be confirmed, since the placement officers had deleted the records early. Another 3,008 were recorded incorrectly in order to give the false impression that the labour exchange office had been responsible for the placement (Trampusch 2002: 6).

The fifteen members of the Hartz Commission were mainly from the private sector, especially from consulting firms, but also included two academics and one representative each from local and state governments and three representatives from the social partners.

The lowest pay levels in the two collective agreements are €5.78 and €6.85 per hour. This means that the basic wage for temporary workers is below that of all other sectors covered by collective agreements in Germany, with the exception of the hotel, restaurant and agricultural sectors (Bispinck 2004: 68–69).