The changing labour market in Germany in times of crisis - Solidar
The changing labour market in Germany in times of crisis - Solidar The changing labour market in Germany in times of crisis - Solidar
The changing labour market in Germany in times of crisis DECENT WORK FOR ALL: A KEY FOR EFFECTIVE INDUSTRIAL RELATIONS BRIEFING ON THE SITUATION IN GERMANY 19
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- Page 24: 23 About the project This case stud
<strong>The</strong> <strong>chang<strong>in</strong>g</strong> <strong>labour</strong><br />
<strong>market</strong> <strong>in</strong> <strong>Germany</strong><br />
<strong>in</strong> <strong>times</strong> <strong>of</strong> <strong>crisis</strong><br />
DECENT WORK FOR ALL:<br />
A KEY FOR EFFECTIVE INDUSTRIAL RELATIONS<br />
BRIEFING ON THE SITUATION IN GERMANY<br />
19
01<br />
Part 1<br />
<strong>The</strong> <strong>chang<strong>in</strong>g</strong> <strong>labour</strong> <strong>market</strong> <strong>in</strong> <strong>Germany</strong> <strong>in</strong> <strong>times</strong> <strong>of</strong><br />
<strong>crisis</strong> by Claudia Bodegan & Birgit Kraemer (HBS) *<br />
<strong>The</strong> German economy<br />
In <strong>Germany</strong>, Europe’s largest economy, about 68% <strong>of</strong> all employees worked <strong>in</strong> the<br />
services sector <strong>in</strong> 2007, which is slightly less than the average <strong>of</strong> the 15 EU Member<br />
States that constituted the EU before the enlargement <strong>of</strong> 1 May 2004 (EU15). <strong>Germany</strong>’s<br />
transformation to a service society has been marked by a growth <strong>in</strong> personal and<br />
bus<strong>in</strong>ess services and a decl<strong>in</strong>e <strong>in</strong> social (state) services. While services make up 70%<br />
<strong>of</strong> gross domestic product (GDP), manufactur<strong>in</strong>g and construction have held their<br />
ground, account<strong>in</strong>g for 30% <strong>of</strong> GPD s<strong>in</strong>ce the early 1990s. <strong>The</strong> automotive, mach<strong>in</strong>ery<br />
and chemicals sectors contribute to <strong>Germany</strong>’s lead<strong>in</strong>g role on the world export <strong>market</strong>.<br />
<strong>The</strong> dependency on exports however meant that the downturn <strong>in</strong> the German economy<br />
dur<strong>in</strong>g the recession was more severe than the European average. While full-time work<br />
has been decl<strong>in</strong><strong>in</strong>g, <strong>Germany</strong> has the second highest level <strong>of</strong> part-time employment <strong>in</strong><br />
the 27 EU Member States (EU27).<br />
In the past decade, pay trends for the employed workforce <strong>in</strong> <strong>Germany</strong> have been<br />
marked by wage restra<strong>in</strong>t; developments have thus differed from ma<strong>in</strong> European trends<br />
<strong>in</strong> several respects: real earn<strong>in</strong>gs decreased by 1.5% over the period 2000–2008<br />
accord<strong>in</strong>g to federal statistics, while they <strong>in</strong>creased <strong>in</strong> most other European countries.<br />
In a rank<strong>in</strong>g <strong>of</strong> European <strong>labour</strong> costs based on Eurostat data, <strong>Germany</strong> came eighth <strong>in</strong><br />
terms <strong>of</strong> hourly <strong>labour</strong> costs <strong>in</strong> the private sector <strong>in</strong> 2007 and 2008, with € 28 per hour<br />
<strong>in</strong> <strong>Germany</strong> compared with an average <strong>of</strong> € 26 at EU level. Whereas <strong>labour</strong> costs <strong>in</strong> the<br />
German manufactur<strong>in</strong>g sector were among the highest <strong>in</strong> the EU (fourth place), <strong>labour</strong><br />
costs <strong>in</strong> private services matched the European average.<br />
In 2009, the gender pay gap was 23% which is one <strong>of</strong> the highest <strong>in</strong> Europe. Accord<strong>in</strong>g<br />
to Destatis, the Federal Statistical Office (Statistisches Bundesamt), gross hourly wages<br />
<strong>of</strong> female employees rose by 2.7% compared to the previous year up to € 14.90. For Men<br />
it rose by 2.6 % to € 19.40. Thus, the gender pay gap rema<strong>in</strong>ed by 23% as <strong>in</strong> the previous<br />
years.<br />
In light <strong>of</strong> a grow<strong>in</strong>g number <strong>of</strong> low-wage earners, the lack <strong>of</strong> a statutory m<strong>in</strong>imum<br />
wage has become a hotly debated issue <strong>in</strong> German politics. Instead, government makes<br />
use <strong>of</strong> the Posted Workers Act (Arbeitnehmer-Entsendegesetz) which allows the<br />
m<strong>in</strong>imum standards on pay and work<strong>in</strong>g conditions <strong>of</strong> a sectoral collective agreement<br />
to be extended to the whole <strong>in</strong>dustry, cover<strong>in</strong>g all domestic and posted workers –<br />
namely, workers from another EU Member State sent temporarily by their employer to<br />
work <strong>in</strong> <strong>Germany</strong>.<br />
*<br />
This paper is a synopsis <strong>of</strong> research <strong>of</strong> the Institute <strong>of</strong> Economic and Social Research<br />
(Wirtschafts- und Sozialwissenschaftliches Institut/WSI) with<strong>in</strong> the Hans-Böckler-<br />
Foundation (Hans-Böckler-Stiftung/HBS). Some parts <strong>of</strong> this paper are taken from the<br />
WSI’s contri bution to the EIRO’s homepage (www.eiro.eur<strong>of</strong>ound.eu.<strong>in</strong>t) prepared by<br />
Birgit Kraemer and Dr. He<strong>in</strong>er Dribbusch. We would like to thank Thorsten Franz who<br />
helped to compile this report.
02<br />
Latest <strong>labour</strong> <strong>market</strong> developments<br />
In the aftermath <strong>of</strong> the f<strong>in</strong>ancial crash <strong>in</strong> 2008 the German economy contracted severely:<br />
GDP decl<strong>in</strong>ed by 6.7% between the beg<strong>in</strong>n<strong>in</strong>g <strong>of</strong> 2008 and the first quarter <strong>of</strong> 2009. In the<br />
last quarter <strong>of</strong> 2008, gross national product dropped by 2.4% and <strong>in</strong> the first quarter<br />
<strong>of</strong> 2009 by 3.5% compared with the previous year, accord<strong>in</strong>g to the Institute for<br />
Employment Research (Institut für Arbeitsmarkt- und Berufsforschung/IAB). <strong>The</strong><br />
metalwork<strong>in</strong>g <strong>in</strong>dustry and the chemical <strong>in</strong>dustry were hit the hardest by the recession<br />
<strong>in</strong> 2008 and 2009, whereas health, social service and education were hardly affected <strong>in</strong><br />
2008 and 2009. However, it is to be expected that public services and private personal<br />
services will <strong>in</strong> the long run have to bear the costs <strong>of</strong> <strong>crisis</strong>-related sav<strong>in</strong>g programmes.<br />
“<strong>The</strong> German <strong>labour</strong> <strong>market</strong><br />
development s<strong>in</strong>ce the<br />
beg<strong>in</strong>n<strong>in</strong>g <strong>of</strong> the recession has<br />
been labelled a ‘job miracle’,<br />
s<strong>in</strong>ce unemployment <strong>in</strong>creased<br />
below EU-average.”<br />
<strong>The</strong> German <strong>labour</strong> <strong>market</strong> development s<strong>in</strong>ce the beg<strong>in</strong>n<strong>in</strong>g <strong>of</strong> the recession has been<br />
labelled a ‘job miracle’, s<strong>in</strong>ce unemployment <strong>in</strong>creased below EU-average. Accord<strong>in</strong>g<br />
to figures by Destatis the economically active population still <strong>in</strong>creased by 1.4% <strong>in</strong> 2008<br />
and dropped by only 0.1% <strong>in</strong> 2009. Also <strong>in</strong> 2009, full-time employment subject to social<br />
security contribution decreased by only 1.1%, whereas part time work rose by 2.3%. <strong>The</strong><br />
total number <strong>of</strong> unemployed persons <strong>in</strong>creased by 4.7% from 2008 to 2009. <strong>The</strong><br />
unemployment rate went up to 8.2% <strong>in</strong> May 2009, correspond<strong>in</strong>g to an <strong>in</strong>crease <strong>of</strong> 0.4<br />
percentage po<strong>in</strong>ts compared with the previous year; <strong>in</strong> May 2009, the unemployment<br />
rate stood at 13.3% <strong>in</strong> East <strong>Germany</strong> and 6.9% <strong>in</strong> West <strong>Germany</strong>. Flexible work<strong>in</strong>g time<br />
arrangements and short-time work helped to prevent a more significant <strong>in</strong>crease <strong>in</strong><br />
unemployment <strong>in</strong> the wake <strong>of</strong> the sharp decl<strong>in</strong>e <strong>in</strong> demand.<br />
Ma<strong>in</strong>ta<strong>in</strong><strong>in</strong>g employment dur<strong>in</strong>g the <strong>crisis</strong> 1<br />
In order to handle the economic <strong>crisis</strong> follow<strong>in</strong>g the f<strong>in</strong>ancial crash <strong>in</strong> 2008, the federal<br />
government turned to employers’ associations and – for the first time <strong>in</strong> years – to the<br />
trade unions <strong>in</strong> plann<strong>in</strong>g for the economic stimulus packages and for other measures<br />
protect<strong>in</strong>g employment. <strong>The</strong> two parties differed strongly on the need for state<br />
<strong>in</strong>tervention on the extent <strong>of</strong> state regulation.<br />
In fall 2008, the Confederation <strong>of</strong> German Employers’ Associations (Bundesverband der<br />
Arbeitgeberverbände/BDA) considered reductions <strong>in</strong> taxes and non-wage <strong>labour</strong> costs<br />
as an “economic stimulus programme”. A more detailed statement was published <strong>in</strong><br />
November 2008 by the Confederation <strong>of</strong> German Industry (Bundesverband der<br />
Deutschen Industrie/BDI) suggest<strong>in</strong>g that the economic <strong>crisis</strong> was to be tackled by<br />
limit<strong>in</strong>g non-wage <strong>labour</strong> costs, by f<strong>in</strong>ancial <strong>in</strong>stitutes provid<strong>in</strong>g sufficient credit to the<br />
private economy and by carry<strong>in</strong>g out planned public <strong>in</strong>vestments <strong>in</strong> schools.<br />
In contrast, trade unions published detailed plans for a stimulus package. In December<br />
2008, the Metalworkers’ Union “IG Metall” published a ‘7 po<strong>in</strong>t programme to stabilise<br />
employment’ which called for credits to enterprises, for the pro-active use <strong>of</strong> shorttime<br />
work, for a scrapp<strong>in</strong>g bonus to support the car-manufactur<strong>in</strong>g <strong>in</strong>dustry and for the<br />
extension <strong>of</strong> codeterm<strong>in</strong>ation rights. Relocation and plant closures should depend on a<br />
2/3 vote <strong>of</strong> the supervisory board. Works council members should have the right to veto<br />
relocations and closures, accord<strong>in</strong>g to “IG Metall”. On 12 December 2008, the Confederation<br />
<strong>of</strong> German Trade Unions (Deutscher Gewerkschaftsbund/DGB) called for an economic<br />
1<br />
Dribbusch, He<strong>in</strong>er (2009) Work<strong>in</strong>g time accounts and short-time work used to ma<strong>in</strong>ta<strong>in</strong> employment,<br />
http://www.eur<strong>of</strong>ound.europa.eu/eiro/2009/12/articles/de0912059i.htm.
03<br />
“... 51% <strong>of</strong> all establishments<br />
with a works council are<br />
affected by the <strong>crisis</strong>. <strong>The</strong> <strong>crisis</strong><br />
affects <strong>in</strong> particular sectors like<br />
raw materials and <strong>in</strong>vestment<br />
goods.”<br />
and growth stimulus package <strong>of</strong> € 60 billion or 2.5% <strong>of</strong> gross domestic product (GDP) to<br />
generate about 710,000 new jobs <strong>in</strong> 2009 and up to 730,000 jobs <strong>in</strong> 2010. It also suggested<br />
additional public spend<strong>in</strong>g on education and the energetic refurbishment <strong>of</strong> build<strong>in</strong>gs,<br />
an <strong>in</strong>crease <strong>in</strong> the flat-rate benefit for the long-term unemployed (Arbeitslosengeld II)<br />
and so-called consumer cheques.<br />
<strong>The</strong> economic stimulus packages <strong>in</strong>cluded various measures such as extensive credits to<br />
the private sector, f<strong>in</strong>ancial means for the energetic refurbishment <strong>of</strong> build<strong>in</strong>gs <strong>in</strong> support<br />
<strong>of</strong> the construction sector, a scrapp<strong>in</strong>g bonus <strong>in</strong> support <strong>of</strong> the automotive <strong>in</strong>dustry and<br />
the extension <strong>of</strong> the duration <strong>of</strong> short time work to 18 months and, <strong>in</strong> 2009, to 24 months.<br />
In November 2009, the Institute <strong>of</strong> Economic and Social Research (Wirtschafts- und<br />
Sozialwissenschaftliches Institut/WSI) with<strong>in</strong> the Hans-Böckler-Foundation (Hans-<br />
Böckler-Stiftung/HBS) published new f<strong>in</strong>d<strong>in</strong>gs (<strong>in</strong> German) from a special WSI Works<br />
Council Survey on the effects <strong>of</strong> the economic <strong>crisis</strong>. <strong>The</strong> survey asked works councils<br />
whether the company was affected by the <strong>crisis</strong> and which measures had been taken to<br />
ma<strong>in</strong>ta<strong>in</strong> employment and avoid forced dismissals 2 . Its results are representative for<br />
companies with 20 or more employees and a works council. <strong>The</strong> survey <strong>in</strong>volved 2,324<br />
works councils and was conducted between July and September 2009.<br />
<strong>The</strong> results show that 51% <strong>of</strong> all establishments with a works council are affected by the<br />
<strong>crisis</strong>. <strong>The</strong> <strong>crisis</strong> affects <strong>in</strong> particular sectors like raw materials and <strong>in</strong>vestment goods.<br />
Whereas 78% <strong>of</strong> establishments <strong>in</strong> the raw materials and capital goods sector and 75%<br />
<strong>of</strong> those <strong>in</strong> the <strong>in</strong>vestment goods and durables sector took measures aimed at<br />
safeguard<strong>in</strong>g employment, this was the case <strong>in</strong> only 18% <strong>of</strong> establishments <strong>in</strong> the<br />
f<strong>in</strong>ancial services sector. However, only a m<strong>in</strong>ority <strong>of</strong> companies have massively laid <strong>of</strong>f<br />
workers. <strong>The</strong> survey revealed that the two most widespread methods used to cut costs<br />
while ma<strong>in</strong>ta<strong>in</strong><strong>in</strong>g employment levels have been work<strong>in</strong>g time accounts and short-time<br />
work. Nonetheless, job cuts have also occurred <strong>in</strong> various ways.<br />
Companies have used a wide variety <strong>of</strong> measures aim<strong>in</strong>g to tackle the <strong>crisis</strong> by cutt<strong>in</strong>g<br />
<strong>labour</strong> costs while avoid<strong>in</strong>g dismissals. <strong>The</strong> most widespread measure is the use <strong>of</strong><br />
work<strong>in</strong>g time accounts to reduce effective work<strong>in</strong>g time. In total, 30% <strong>of</strong> companies made<br />
use <strong>of</strong> work<strong>in</strong>g time accounts either <strong>in</strong> the form <strong>of</strong> a reduction <strong>of</strong> hours saved <strong>in</strong> <strong>in</strong>dividual<br />
accounts or <strong>in</strong> the form <strong>of</strong> work<strong>in</strong>g time credits which will have to be worked <strong>in</strong> the future<br />
when bus<strong>in</strong>ess recovers. <strong>The</strong> second most widespread measure is the <strong>in</strong>troduction <strong>of</strong><br />
short-time work. Other measures <strong>in</strong>clude the <strong>in</strong>ternal post<strong>in</strong>g <strong>of</strong> employees and<br />
adjusted schemes for paid leave, as well as cuts <strong>in</strong> pay and benefits (Table 1).<br />
Table 1: Use <strong>of</strong> various cost-cutt<strong>in</strong>g measures short <strong>of</strong> forced redundancies (% <strong>of</strong> all<br />
establishments)<br />
Measure<br />
% <strong>of</strong> establishments <strong>in</strong>troduc<strong>in</strong>g<br />
cost-cutt<strong>in</strong>g measures<br />
Reduction or expansion <strong>of</strong> work<strong>in</strong>g time accounts 30<br />
Introduction <strong>of</strong> short-time work 20<br />
Internal post<strong>in</strong>g 14<br />
New schemes for paid leave 13<br />
Cuts <strong>in</strong> pay 11<br />
Other changes <strong>in</strong> work<strong>in</strong>g time 8<br />
Cuts <strong>in</strong> benefits 5<br />
Note: Survey covered establishments with 20 and more employees and a works council; multiple answers were possible,<br />
Source: WSI-Betriebsrätebefragung 2009<br />
2<br />
Dribbusch, He<strong>in</strong>er (2009) Work<strong>in</strong>g time accounts and short-time work used to ma<strong>in</strong>ta<strong>in</strong> employment,<br />
http://www.eur<strong>of</strong>ound.europa.eu/eiro/2009/12/articles/de0912059i.htm.
04<br />
Although the number <strong>of</strong> redundancies was much lower than expected by some<br />
observers, there have been job cuts (Table 2).<br />
Temporary agency workers were among the first to lose their jobs, but works councils<br />
also reported that <strong>in</strong> 28% <strong>of</strong> establishments job cuts affected the core workforce. In 14%<br />
<strong>of</strong> establishments, there were forced redundancies.<br />
In some cases, new <strong>in</strong>struments were developed to bridge the ongo<strong>in</strong>g <strong>crisis</strong>. <strong>The</strong> Ruhr<br />
Employer Association and the North-Rh<strong>in</strong>e Westphalia Metalworkers’ Union concluded a<br />
collective agreement that provides for a temporary staff<strong>in</strong>g pool among manufacturers <strong>in</strong><br />
the metal and electrical <strong>in</strong>dustry <strong>in</strong> the Ruhr region <strong>of</strong> North-Rh<strong>in</strong>e Westphalia <strong>in</strong> Western<br />
<strong>Germany</strong>. Cover<strong>in</strong>g about 350 bus<strong>in</strong>esses and up to 70,000 workers, the Ruhr agreement<br />
is the largest <strong>of</strong> its k<strong>in</strong>d <strong>in</strong> the country <strong>in</strong> terms <strong>of</strong> coverage rate. <strong>The</strong> agreement provides<br />
for the temporary assignment <strong>of</strong> blue-collar and white-collar workers – exclud<strong>in</strong>g tra<strong>in</strong>ees<br />
and teleworkers – to other establishments under the conditions <strong>of</strong> the employment<br />
contract <strong>of</strong> the send<strong>in</strong>g establishment. It provides for temporary work as well as for a<br />
temporary transfer for tra<strong>in</strong><strong>in</strong>g purposes. <strong>The</strong> works council is <strong>in</strong>volved under the terms<br />
<strong>of</strong> the Works Constitution Act (Betriebsverfassungsgesetz/BetrVG). To date, IG Metall<br />
knows <strong>of</strong> 15 collective agreements on local staff<strong>in</strong>g pools <strong>in</strong> North-Rh<strong>in</strong>e Westphalia alone.<br />
“In some cases, new <strong>in</strong>struments<br />
were developed to bridge<br />
the ongo<strong>in</strong>g <strong>crisis</strong>. <strong>The</strong> Ruhr<br />
Employer Association and the<br />
North-Rh<strong>in</strong>e Westphalia<br />
Metalworkers’ Union concluded<br />
a collective agreement that<br />
provides for a temporary<br />
staff<strong>in</strong>g pool among<br />
manufacturers <strong>in</strong> the metal<br />
and electrical <strong>in</strong>dustry <strong>in</strong> the<br />
Ruhr region <strong>of</strong> North-Rh<strong>in</strong>e<br />
Westphalia <strong>in</strong> Western<br />
<strong>Germany</strong>.”<br />
<strong>The</strong> parties to collective barga<strong>in</strong><strong>in</strong>g emphasise that <strong>in</strong> their experience the creation <strong>of</strong><br />
staff<strong>in</strong>g pools depends on a strong network<strong>in</strong>g structure and the existence <strong>of</strong> a<br />
representative on the employer side promot<strong>in</strong>g and organis<strong>in</strong>g the staff transfer. In<br />
addition, the local trade union needs to be supportive, and <strong>in</strong>form and support the works<br />
councils. However, temporary staff<strong>in</strong>g can be more costly to the employer than<br />
temporary agency work. <strong>The</strong> results <strong>of</strong> the Ruhr Agreement rema<strong>in</strong> to be seen.<br />
Table 2: Use <strong>of</strong> cost-cutt<strong>in</strong>g measures <strong>in</strong>volv<strong>in</strong>g job cuts (% <strong>of</strong> all establishments)<br />
Measure<br />
% <strong>of</strong> establishments <strong>in</strong>troduc<strong>in</strong>g<br />
cost-cutt<strong>in</strong>g measures<br />
A reduction <strong>of</strong> the core workforce 28<br />
Reduction <strong>of</strong> temporary agency work 24<br />
Non-renewal <strong>of</strong> fixed-term contracts 17<br />
Pay<strong>in</strong>g compensation for voluntary redundancies 7<br />
Establishment <strong>of</strong> a so-called transfer agency<br />
(Transfergesellschaft)<br />
2<br />
Note: Survey covered establishments with 20 and more employees and a works council; multiple answers were possible,<br />
Source: WSI-Betriebsrätebefragung 2009
05<br />
“Various measures have been<br />
implemented dur<strong>in</strong>g the last<br />
two decades <strong>in</strong> order to further<br />
flexibilise the <strong>labour</strong> <strong>market</strong>.<br />
Summ<strong>in</strong>g up, work<strong>in</strong>g time,<br />
social benefits, <strong>labour</strong> rights<br />
and employment protection<br />
were deregulated. As a<br />
consequence, wage <strong>in</strong>equalities<br />
as well as atypical employment<br />
<strong>in</strong>creased.”<br />
Atypical employment<br />
In sum, the German <strong>labour</strong> <strong>market</strong> witnessed significant changes <strong>in</strong> the last decades.<br />
Especially atypical forms <strong>of</strong> employment have become prom<strong>in</strong>ent. On the one hand<br />
politics promoted these forms by deregulat<strong>in</strong>g. On the other hand employees and<br />
employers alike made use <strong>of</strong> the different forms <strong>of</strong> atypical forms <strong>of</strong> employment.<br />
Various measures have been implemented dur<strong>in</strong>g the last two decades <strong>in</strong> order to further<br />
flexibilise the <strong>labour</strong> <strong>market</strong>. Summ<strong>in</strong>g up, work<strong>in</strong>g time, social benefits, <strong>labour</strong> rights<br />
and employment protection were deregulated. As a consequence, wage <strong>in</strong>equalities as<br />
well as atypical employment <strong>in</strong>creased.<br />
However, the ma<strong>in</strong> problems <strong>in</strong> the <strong>labour</strong> <strong>market</strong> (e.g. long-term unemployment) were<br />
not resolved, either. Moreover, new problems arrived: the risk <strong>of</strong> poverty <strong>in</strong>creased 3 ,<br />
membership <strong>of</strong> social <strong>in</strong>surance schemes decreased, <strong>in</strong>vestments <strong>in</strong> (further) education<br />
and lifelong learn<strong>in</strong>g rema<strong>in</strong>ed low 4 . With these developments the importance <strong>of</strong><br />
‘standard full-time employment arrangements’, the “Normalarbeitsverhältnis”, as the<br />
regular form <strong>of</strong> employment for the majority <strong>of</strong> employees is dim<strong>in</strong>ish<strong>in</strong>g, with knockon<br />
effects for social security, wages and work<strong>in</strong>g conditions 5 .<br />
Statistical analyses differentiate this picture: Job growth basically takes place <strong>in</strong> parttime<br />
and atypical employment. Accord<strong>in</strong>g to the Federal Statistical Office employment<br />
rates <strong>in</strong>creased from 50.8% to 51.5% (between 1991 and 2006), whereas participation<br />
decl<strong>in</strong>ed from 69.3% to 68.9%. Between 1991 and 2004, the participation rate <strong>of</strong> women<br />
rose by 2.2% (only <strong>in</strong> West <strong>Germany</strong>) (62.2%), while male participation decl<strong>in</strong>ed by 4.1%.<br />
Almost half <strong>of</strong> the employed women work part-time (46%). In the period between 1995<br />
and 2006, the share <strong>of</strong> employees liable to social security contributions dropped from<br />
75% to 67.5% while between 1990 and 2004 full-time jobs decl<strong>in</strong>ed by 19%. Accord<strong>in</strong>g to<br />
Federal Employment Agency (Bundesagentur für Arbeit) statistics, about 6.5 million<br />
people were employed as cont<strong>in</strong>gent workers (<strong>in</strong>clud<strong>in</strong>g persons hold<strong>in</strong>g other job<br />
contracts) <strong>in</strong> 2007, i.e. workers who work for an organisation on a non-permanent basis,<br />
usually work<strong>in</strong>g under contract for a fixed period or a specific project, also known as<br />
freelancers, <strong>in</strong>dependent pr<strong>of</strong>essionals, temporary contract workers, <strong>in</strong>dependent<br />
contractors or consultants. Thus, non-standard forms <strong>of</strong> employment have ga<strong>in</strong>ed <strong>in</strong><br />
significance and have triggered controversial discussion. So far empirical research has<br />
been ma<strong>in</strong>ly concerned with the degree to which non-standard employment and normal<br />
employment differ with respect to their work<strong>in</strong>g conditions. Little attention has been<br />
given to the question <strong>of</strong> how the transition between different forms <strong>of</strong> employment<br />
works. Analyses show that transitions from non-standard to normal employment work<br />
only to a limited degree. People who were engaged <strong>in</strong> normal employment are more<br />
likely to f<strong>in</strong>d such employment aga<strong>in</strong>. Hence it seems to be justified, to a certa<strong>in</strong> extent,<br />
to talk about some form <strong>of</strong> path dependency <strong>of</strong> employment. However the probability <strong>of</strong><br />
<strong>in</strong>dividuals mov<strong>in</strong>g from a non-standard employment relationship to a normal<br />
employment relationship differs, depend<strong>in</strong>g on the specific form <strong>of</strong> employment 6 .<br />
Consequently, new social risks evolve through new transitions <strong>in</strong> lifestyle and new<br />
social policy <strong>in</strong>struments need to be developed 7 .<br />
3<br />
For statistical data and background <strong>in</strong>formation on the ris<strong>in</strong>g risk <strong>of</strong> poverty <strong>in</strong> <strong>Germany</strong> see on the Hans-<br />
Böckler-Foundation’s website (<strong>in</strong> German): http://www.boeckler-boxen.de/1116.htm.<br />
4<br />
Hartmut Seifert (2006) Was hat die Flexibilisierung des Arbeitsmarktes gebracht? WSI-Mitteilungen 11/2006.<br />
5<br />
Berndt Keller/Hartmut Seifert (Hg.) (2007) Atypische Beschäftigung – Flexibilisierung und soziale Risiken,<br />
Berl<strong>in</strong>: edition sigma.<br />
6<br />
Miriam Gensicke/Alexander Herzog-Ste<strong>in</strong>/Hartmut Seifert/Nikolai Tschersich (2010) Employment: once nonstandard,<br />
always non-standard? Exam<strong>in</strong><strong>in</strong>g transitions between non-standard and normal forms <strong>of</strong><br />
employment. WSI Mitteilungen 4/2010, S. 179-187.<br />
7<br />
Günther Schmid (2008) Entgrenzung der Erwerbsarbeit – Erweiterung der sozialen Sicherheit. WSI-<br />
Mitteilungen 07/2008, S. 358-364.
06<br />
<strong>The</strong>refore, trade unions have put renewed emphasis on counsell<strong>in</strong>g atypical workers on<br />
job-related matters and <strong>in</strong>surance issues. <strong>The</strong> United Services Union (Vere<strong>in</strong>te<br />
Dienstleistungsgewerkschaft/ver.di) provides onl<strong>in</strong>e-guidance to unemployed persons.<br />
<strong>The</strong> trade union has also set up a company provid<strong>in</strong>g services such as counsell<strong>in</strong>g for<br />
self-employed persons (<strong>in</strong>clud<strong>in</strong>g non-members); other counsell<strong>in</strong>g projects target<br />
atypical workers <strong>in</strong> the pr<strong>of</strong>essional and adult education sector, the call centre <strong>in</strong>dustry,<br />
the retail and the media sector. Moreover, the trade union tra<strong>in</strong>s volunteers to be<br />
contacted locally for guidance on social <strong>in</strong>surance matters. Numerous activities address<br />
education (school level) and cont<strong>in</strong>ued vocational tra<strong>in</strong><strong>in</strong>g. Trade union membership<br />
fees typically <strong>in</strong>clude legal protection and additional provisions <strong>in</strong> some <strong>in</strong>surance<br />
schemes <strong>in</strong>clud<strong>in</strong>g the so-called Riester pension (private pension contributions eligible<br />
for government subsidies). Initiatives on the part <strong>of</strong> employers’ associations typically<br />
relate to the field <strong>of</strong> vocational tra<strong>in</strong><strong>in</strong>g but more recently the issue <strong>of</strong> demographic<br />
change and the employment <strong>of</strong> elderly workers have been taken up. Employer<br />
associations and trade unions have to be consulted if a new pr<strong>of</strong>ession is def<strong>in</strong>ed and if<br />
a new tra<strong>in</strong><strong>in</strong>g scheme is <strong>in</strong>tegrated <strong>in</strong>to the dual vocational tra<strong>in</strong><strong>in</strong>g system. Mostly<br />
recently, a range <strong>of</strong> new pr<strong>of</strong>essions have been def<strong>in</strong>ed to improve the employability <strong>of</strong><br />
persons <strong>in</strong> low skilled jobs. As the fast food service <strong>in</strong>dustry (McDonalds, Burger K<strong>in</strong>g,<br />
etc.) provides for many low skilled and atypical jobs <strong>in</strong> the restaurant sector, the new<br />
pr<strong>of</strong>ession is meant to improve the career chances <strong>of</strong> employees.<br />
“Mostly recently, a range <strong>of</strong><br />
new pr<strong>of</strong>essions have been<br />
def<strong>in</strong>ed to improve the<br />
employability <strong>of</strong> persons <strong>in</strong><br />
low skilled jobs. As the fast<br />
food service <strong>in</strong>dustry<br />
(McDonalds, Burger K<strong>in</strong>g, etc.)<br />
provides for many low skilled<br />
and atypical jobs <strong>in</strong> the<br />
restaurant sector, the new<br />
pr<strong>of</strong>ession is meant to improve<br />
the career chances <strong>of</strong><br />
employees.”<br />
<strong>The</strong>re is a strong gender dimension to the problem as <strong>labour</strong> <strong>market</strong> policies have<br />
<strong>in</strong>creased the employment rate by promot<strong>in</strong>g part-time work and m<strong>in</strong>i-jobs for women<br />
and as collective barga<strong>in</strong><strong>in</strong>g is at its weakest <strong>in</strong> female dom<strong>in</strong>ated service sectors.<br />
Today, 46% <strong>of</strong> employed women work part-time while female total work<strong>in</strong>g hours have<br />
stayed the same as <strong>in</strong> 1990. Given wage rates <strong>in</strong> female pr<strong>of</strong>essions, even standard parttime<br />
work does not pay enough to make a liv<strong>in</strong>g nor does it provide for sufficient<br />
unemployment allowances and retirement pensions. Thus, women’s participation <strong>in</strong> the<br />
<strong>labour</strong> <strong>market</strong>, although <strong>in</strong>creas<strong>in</strong>g <strong>in</strong> numbers, rema<strong>in</strong>s precarious. A newly published<br />
book by the WSI <strong>in</strong>vestigates the situation <strong>of</strong> women at the company level. This state<strong>of</strong>-the-art<br />
synopsis explores various gender equality policies and presents<br />
recommendations for action 8 . It shows that <strong>labour</strong> <strong>market</strong> segregation, gender wage<br />
gap, shorter work<strong>in</strong>g time and fewer career opportunities characterise women’s<br />
situation <strong>in</strong> the <strong>labour</strong> <strong>market</strong>. Moreover, gender equality activities at the enterprise<br />
level have been discussed extensively <strong>in</strong> <strong>Germany</strong>. Nevertheless, expertise on<br />
stimulat<strong>in</strong>g gender equality is still lack<strong>in</strong>g <strong>in</strong> most companies.<br />
<strong>The</strong> extensive debate on non-standard employment <strong>in</strong> <strong>Germany</strong> focuses <strong>in</strong> particular on<br />
‘m<strong>in</strong>i-jobs’ and temporary agency work 9 . <strong>The</strong> so called ‘m<strong>in</strong>i-jobs’ (ger<strong>in</strong>gfügige<br />
Beschäftigung) are part-time jobs not pay<strong>in</strong>g more than € 400 a month, which is the<br />
threshold for social security contributions. This preferential treatment also applies to<br />
people who have (only) one m<strong>in</strong>or job <strong>in</strong> addition to their ma<strong>in</strong> job. Employers, however,<br />
must pay a fixed percentage <strong>of</strong> the amount paid to the employee up to this threshold <strong>in</strong><br />
taxes and contributions to pensions and healthcare <strong>in</strong>surance. <strong>The</strong> payment procedure<br />
for these employers’ contributions and flat-rate tax has been simplified <strong>in</strong> the last<br />
decade, and both <strong>of</strong> them now go to a s<strong>in</strong>gle collection agency. Today the employer has<br />
to pay around 31% <strong>of</strong> the wage to this central agency. This encloses 15% <strong>of</strong> contributions<br />
to pension <strong>in</strong>surance and 13% to health <strong>in</strong>surance. In 2008 17.4% <strong>of</strong> total employments<br />
are ‘m<strong>in</strong>i jobs’. More <strong>in</strong>terest<strong>in</strong>gly, 80% <strong>of</strong> the workers with m<strong>in</strong>i-jobs are women 10 .<br />
8<br />
Projektgruppe GiB (2010): Geschlechterungleichheiten im Betrieb. Arbeit, Entlohnung und Gleichstellung<br />
<strong>in</strong> der Privatwirtschaft. Forschung aus der Hans-Böckler-Stiftung. Berl<strong>in</strong>: edition sigma.<br />
9<br />
Seifert, H./Brehmer, W. (2008) Leiharbeit: Funktionswandel e<strong>in</strong>er flexiblen Beschäftigungsform, <strong>in</strong>: WSI<br />
Mitteilungen 6/2008, S. 335-341.<br />
10<br />
He<strong>in</strong>er Dribbusch (2010) <strong>Germany</strong>: Flexible forms <strong>of</strong> work: 'very atypical' contractual arrangements,<br />
http://www.eur<strong>of</strong>ound.europa.eu/ewco/studies/tn0812019s/de0812019q.htm.
07<br />
“Temporary agency work was<br />
promoted by the Hartz<br />
regulation <strong>in</strong> <strong>Germany</strong> and<br />
altered <strong>in</strong> character dur<strong>in</strong>g the<br />
last years. It is no longer meant<br />
to cover certa<strong>in</strong> production<br />
peaks but has developed as a<br />
regular form <strong>of</strong> employment at<br />
the company level.”<br />
Research shows that there is a strong l<strong>in</strong>k between ‘m<strong>in</strong>i-jobs’ and low-pay. In general,<br />
‘m<strong>in</strong>i-jobs’ are low-pay jobs. In sum, employment <strong>in</strong> the low-pay sector <strong>in</strong>creased <strong>in</strong><br />
<strong>Germany</strong> dur<strong>in</strong>g the ‘boom’ <strong>in</strong> 2007. At the same time hourly gross wages decreased 11 .<br />
By the end <strong>of</strong> 2007 6,5 million people - which is every fifth employee works for wages<br />
below low pay threshold <strong>of</strong> € 9.62 <strong>in</strong> West <strong>Germany</strong> and € 7.18 <strong>in</strong> East <strong>Germany</strong>. Every<br />
third <strong>in</strong> the low pay sector has wages below € 6 per hour. Interest<strong>in</strong>gly, more than half<br />
<strong>of</strong> the low pay employees have completed a formal vocational tra<strong>in</strong><strong>in</strong>g. Here the lack <strong>of</strong><br />
a statutory m<strong>in</strong>imum wage <strong>in</strong> <strong>Germany</strong> is strik<strong>in</strong>g.<br />
Temporary agency work was promoted by the Hartz regulation – a legislative package<br />
deal<strong>in</strong>g with <strong>labour</strong> <strong>market</strong> reform and a revision <strong>of</strong> unemployment benefits - <strong>in</strong> <strong>Germany</strong><br />
and altered <strong>in</strong> character dur<strong>in</strong>g the last years. It is no longer meant to cover certa<strong>in</strong><br />
production peaks but has developed as a regular form <strong>of</strong> employment at the company<br />
level. In <strong>Germany</strong>, two forms <strong>of</strong> temporary work exist: temporary agency work, which is<br />
regulated by the Temporary Employment Act (Arbeitnehmerüberlassungsgesetz/AÜG),<br />
and the temporary assignment <strong>of</strong> workers by one employer to another <strong>in</strong> the same craft<br />
or <strong>in</strong>dustry given that there exists an accord<strong>in</strong>g collective agreement between the social<br />
partners. <strong>The</strong> latter type <strong>of</strong> temporary work is based on the assumption that<br />
establishments <strong>in</strong> the same sector <strong>of</strong> economic activity are affected <strong>in</strong> different ways by<br />
an economic downturn and where <strong>in</strong> one establishment lay<strong>of</strong>fs may be considered, <strong>in</strong><br />
another staff absence needs to be covered. <strong>The</strong> barga<strong>in</strong><strong>in</strong>g partners both promote<br />
collective agreements on temporary staff<strong>in</strong>g pools at local or regional level as alternative<br />
measures to lay<strong>of</strong>fs, short-time work and temporary agency work. However, whereas<br />
temporary agency work has been <strong>in</strong>creas<strong>in</strong>g dur<strong>in</strong>g the recession, the implementation <strong>of</strong><br />
the latter form <strong>of</strong> temporary work is still poor.<br />
<strong>The</strong> Hans-Böckler-Foundation provides further statistical data and background <strong>in</strong>formation<br />
on precarious work 12 (Graphs 1 and 2) as well as low pay and m<strong>in</strong>imum wages <strong>in</strong><br />
<strong>Germany</strong> <strong>in</strong> a special service called “Böckler Boxen” 13 (Graphs 3 and 4). Moreover every<br />
two weeks, the Hans Böckler Foundation's <strong>in</strong>formation service (Böckler Impuls)<br />
compiles concise analyses and reports on <strong>labour</strong>, economic and social issues written<br />
for people who are short <strong>of</strong> time. It evaluates scientific sources and sound op<strong>in</strong>ions 14 .<br />
Graph 1: Reduced <strong>in</strong>come – atypical employment<br />
Workers and<br />
employees...<br />
<strong>in</strong> regular employment *<br />
1992<br />
2005<br />
80,5%<br />
65,5%<br />
with atypical contracts<br />
1992<br />
2005<br />
19,5%<br />
34,5%<br />
In the group <strong>of</strong><br />
those with atypical<br />
contracts...<br />
fixed-term contracts<br />
part-time work<br />
1992<br />
2005<br />
1992<br />
2005<br />
3,5%<br />
6,1%<br />
14,5%<br />
18,8%<br />
<strong>in</strong> limited part-time work<br />
1992<br />
2005<br />
2,3%<br />
7,9%<br />
<strong>in</strong> temporary agency work<br />
2001 **<br />
2005<br />
1,7%<br />
3,7%<br />
* Full-time, no fixed-term employment, not <strong>in</strong> limited part-time employment, no temporary agency work<br />
** First year for which data are available.<br />
Source : Socio-economic Panel 2007<br />
SOURCE: HTTP://WWW.BOECKLER-BOXEN.DE/4792.HTM<br />
11<br />
Thorsten Kal<strong>in</strong>a/ Claudia We<strong>in</strong>kopf (2009) Niedriglohnbeschäftigung 2007 weiter gestiegen: zunehmende<br />
Bedeutung von Niedrigstlöhnen. Duisburg: Inst. Arbeit und Qualifikation. IAQ-Report, Nr. 2009-05.<br />
12<br />
See the Hans-Böckler-Foundation’s website: http://www.boeckler-boxen.de/1920.htm (<strong>in</strong> German).<br />
13<br />
See http://www.boeckler-boxen.de/2690.htm (<strong>in</strong> German).<br />
14<br />
See http://www.boeckler.de/32006.html.
08<br />
Graph 2: Atypical employment – high risk <strong>of</strong> precarious work<br />
Compared to workers and employees <strong>in</strong> full-time employment, the risk<br />
to have a low wage imply<strong>in</strong>g precarious <strong>labour</strong> is X-<strong>times</strong> as high for...<br />
women<br />
men<br />
with fixed-term contracts 3,4 x 2,6 x<br />
fixed part-time employee 1,9 x 4,5 x<br />
temporary agency workers 4,2 x 6,4 x<br />
to be unemployed after one year...<br />
women<br />
men<br />
with fixed-term contracts 3,4 x 3,1 x<br />
fixed part-time employee 0,9 x 0,9 x<br />
temporary agency workers 3,6 x 3,1 x<br />
Source : Bremer, Seifert 2009<br />
SOURCE: HTTP://WWW.BOECKLER-BOXEN.DE/5008.HTM<br />
Graph 3: Low wages: Regular situation for those enter<strong>in</strong>g the <strong>labour</strong> <strong>market</strong><br />
Low-wage earners aged 25 years<br />
and younger*...<br />
Low-wage earners with completed<br />
pr<strong>of</strong>essional tra<strong>in</strong><strong>in</strong>g...<br />
Men and women with fixed-term<br />
contract and low wage...<br />
Work<strong>in</strong>g time : men and women<br />
with a low wage 2007...<br />
1995<br />
30,7%<br />
46,9%<br />
58,5%<br />
43,2%<br />
29,3%<br />
25,4%<br />
22,3%<br />
47%<br />
1995 2007<br />
2007<br />
70,8%<br />
1995 2007<br />
Full-time<br />
m<strong>in</strong>i-job /<br />
limited part-time<br />
employment<br />
Part-time<br />
* Threshold for low wage set at 67% <strong>of</strong> median <strong>in</strong>come<br />
Source : Socio-economic Panel 2007; own calculations Institute for Work, Skills and Tra<strong>in</strong><strong>in</strong>g (Institut Arbeit und Qualifikation). See: http://www.iaq.uni-due.de/en/<strong>in</strong>dex.php<br />
SOURCE: HTTP://WWW.BOECKLER-BOXEN.DE/5750.HTM<br />
Graph 4: Wage earners <strong>in</strong> need <strong>of</strong> supplementary unemployment benefit payments<br />
Percentage <strong>of</strong> persons <strong>in</strong> receipt<br />
<strong>of</strong> unemployment benefit II (ALG II)<br />
hav<strong>in</strong>g a job.<br />
26,5%<br />
Workers and employees <strong>in</strong> need <strong>of</strong> unemployment benefit II (ALG II),<br />
a flat-rate benefit for the long-term unemployed and persons under<br />
social assistance payments, <strong>in</strong> addition to <strong>in</strong>come from waged work.<br />
Self-employed<br />
Employed<br />
102.439<br />
1.232.350<br />
Share <strong>of</strong> cross <strong>in</strong>come charged<br />
aga<strong>in</strong>st the amount <strong>of</strong> the<br />
unemployment benefit II (ALG II)<br />
when calculat<strong>in</strong>g the basic <strong>in</strong>come<br />
support for those with <strong>in</strong>come from<br />
waged work.<br />
28% 18,2%<br />
Source : Federal Employment Agency 2008<br />
Men<br />
Women<br />
Germans<br />
Non-Germans<br />
589.085<br />
718.219<br />
1.043.852<br />
258.975<br />
Below<br />
400 €<br />
400-800 €<br />
Above<br />
800 €<br />
53,8%<br />
SOURCE: HTTP://WWW.BOECKLER-BOXEN.DE/5600.HTM
09<br />
“<strong>The</strong> term flexicurity is <strong>in</strong><br />
general used to describe the<br />
need to counterbalance an<br />
enhanced flexibility <strong>in</strong> the<br />
<strong>labour</strong> <strong>market</strong> with appropriate<br />
social security policies. At the<br />
moment, flexicurity is the s<strong>in</strong>gle<br />
most popular concept for the<br />
reform <strong>of</strong> <strong>labour</strong> <strong>market</strong>s,<br />
<strong>labour</strong> laws and employment<br />
policies <strong>in</strong> the European Union<br />
(EU).”<br />
Flexicurity<br />
Flexicurity – a comb<strong>in</strong>ation <strong>of</strong> flexibility and security – has <strong>in</strong> a remarkably short time<br />
become a political celebrity <strong>in</strong> its own right. <strong>The</strong> term flexicurity is <strong>in</strong> general used to<br />
describe the need to counterbalance an enhanced flexibility <strong>in</strong> the <strong>labour</strong> <strong>market</strong> with<br />
appropriate social security policies. At the moment, flexicurity is the s<strong>in</strong>gle most popular<br />
concept for the reform <strong>of</strong> <strong>labour</strong> <strong>market</strong>s, <strong>labour</strong> laws and employment policies <strong>in</strong> the<br />
European Union (EU). <strong>The</strong> EU Commission def<strong>in</strong>es flexicurity rather vaguely as an<br />
<strong>in</strong>tegrated strategy to enhance at the same time flexibility and security <strong>in</strong> the <strong>labour</strong><br />
<strong>market</strong>. However, flexicurity is among one <strong>of</strong> the most popular “concepts” promoted<br />
by the European Commission.<br />
In its 2006 Green Paper on “Modernis<strong>in</strong>g <strong>labour</strong> law to meet the challenges <strong>of</strong> the 21st<br />
century”, the European Commission applied the concept <strong>of</strong> flexicurity to concrete policy.<br />
<strong>The</strong> Green Paper ma<strong>in</strong>ly promotes flexicurity policies relax<strong>in</strong>g employment protection<br />
legislation while provid<strong>in</strong>g advances <strong>in</strong> employment and social security for flexible<br />
workforces, like fixed-term, part-time and agency workers, or the self-employed. In<br />
<strong>Germany</strong>, it aims at deregulat<strong>in</strong>g a “rigid” <strong>labour</strong> <strong>market</strong>. Compar<strong>in</strong>g empirical evidence<br />
from 27 EU countries based on data by the European Foundation shows that <strong>in</strong> the<br />
meantime flexibility is achieved at the expense <strong>of</strong> social security. What are therefore<br />
needed are concepts to compensate for the negative effects <strong>of</strong> flexibilisation 15 . As<br />
flexicurity is promoted by the European Commission, there is a risk that <strong>in</strong> <strong>Germany</strong> the<br />
term will be applied to measures which actually do not provide for security.<br />
Although there has been an ongo<strong>in</strong>g debate on the normative concept <strong>of</strong> flexicurity and on<br />
measures <strong>of</strong> implementation at company level and at societal level – particularly on behalf<br />
<strong>of</strong> researchers and trade unions –, chances for implementation have been <strong>in</strong> decl<strong>in</strong>e.<br />
In <strong>Germany</strong>, the term ‘flexicurity’ is <strong>in</strong> fact rarely applied to public policy approaches.<br />
Thus, the views <strong>of</strong> the collective barga<strong>in</strong><strong>in</strong>g parties differ on what can be termed a<br />
flexicurity approach but both are substantially <strong>in</strong>volved <strong>in</strong> its implementation (via works<br />
councils and companies, collective barga<strong>in</strong><strong>in</strong>g, representation <strong>in</strong> bodies <strong>of</strong> the dual<br />
vocational tra<strong>in</strong><strong>in</strong>g and <strong>of</strong> unemployment, pension and health care <strong>in</strong>surance systems).<br />
<strong>The</strong> views <strong>of</strong> employer associations on particular aspects <strong>of</strong> public policies can differ.<br />
For example, the Confederation <strong>of</strong> German Employers Associations (Bundesverband<br />
deutscher Arbeitergeberverbände/BDA), considers that flexicurity is best assured by not<br />
adher<strong>in</strong>g to old forms <strong>of</strong> job protection (contractual arrangements) but by improv<strong>in</strong>g the<br />
chances <strong>of</strong> <strong>in</strong>dividuals to f<strong>in</strong>d a new job quickly. <strong>The</strong> flexibility <strong>of</strong> companies as well as the<br />
mobility and flexibility <strong>of</strong> workers is to be <strong>in</strong>creased. <strong>The</strong> BDA supports policies abolish<strong>in</strong>g<br />
restrictions on the employment <strong>of</strong> temporary agency and fixed-term workers, with <strong>labour</strong><br />
<strong>market</strong> policies provid<strong>in</strong>g for an <strong>in</strong>crease <strong>in</strong> atypical jobs and with public measures<br />
subsidis<strong>in</strong>g the pay <strong>of</strong> newly employed job-seekers. Education and cont<strong>in</strong>uous vocational<br />
tra<strong>in</strong><strong>in</strong>g is to be improved by close cooperation with employers. Further reforms are<br />
needed whereby <strong>in</strong>dividuals will have to take more responsibility <strong>in</strong> job seek<strong>in</strong>g, <strong>in</strong><br />
tra<strong>in</strong><strong>in</strong>g and <strong>in</strong> contribut<strong>in</strong>g to <strong>in</strong>surance schemes. <strong>The</strong> BDA highlights contractual<br />
arrangements, lifelong learn<strong>in</strong>g and <strong>labour</strong> <strong>market</strong> policies as some <strong>of</strong> the ma<strong>in</strong> issues.<br />
<strong>The</strong> views <strong>of</strong> the trade unions differ on details. <strong>The</strong> Confederation <strong>of</strong> German Trade<br />
Unions (Deutscher Gewerkschaftsbund/DGB) claims that comb<strong>in</strong><strong>in</strong>g flexibility and<br />
security implies that new concepts <strong>of</strong> regulation are to be developed by public<br />
authorities and collective barga<strong>in</strong><strong>in</strong>g parties. With regard to standard employment, jobs<br />
<strong>of</strong> good quality and <strong>in</strong>ternal job stability are to be taken as the guidel<strong>in</strong>e and new<br />
measures are needed to support atypical workers, such as: the right to permanent<br />
15<br />
Hartmut Seifert/Andranik Tangian (2008): Flexicurity – Gibt es e<strong>in</strong> Gleichgewicht zwischen Arbeitsmarktflexibilität<br />
und sozialer Sicherheit? WSI-Mitteilungen 11+12/2008, S. 627-635.
10<br />
employment after a certa<strong>in</strong> number <strong>of</strong> fixed term contracts; a statutory m<strong>in</strong>imum wage<br />
and extension <strong>of</strong> the Posted Workers Act to the temporary agency sector. Labour <strong>market</strong><br />
policies <strong>in</strong>creas<strong>in</strong>g temporary agency work, ‘m<strong>in</strong>i-jobs’ and other forms <strong>of</strong> atypical<br />
employment should stop, <strong>in</strong> order to prevent a further substitution <strong>of</strong> permanent jobs<br />
and further growth <strong>of</strong> the low-wage sector. High quality <strong>of</strong> education and <strong>of</strong> the dual<br />
vocational tra<strong>in</strong><strong>in</strong>g system, cont<strong>in</strong>uous tra<strong>in</strong><strong>in</strong>g and adult education is needed to support<br />
the <strong>in</strong>dividual <strong>in</strong> cop<strong>in</strong>g with economic and societal changes. <strong>The</strong> flat-rate benefit for the<br />
long-term unemployed (Arbeitslosengeld II) should be <strong>in</strong>creased; pension schemes<br />
based on the contributions <strong>of</strong> employees and employers are to be reformed to <strong>in</strong>clude<br />
all people <strong>in</strong> employment and to provide special support for those <strong>in</strong> need.<br />
Public policy measures on flexicurity, such as the normalisation <strong>of</strong> part-time and fixedterm<br />
work, were more pronounced <strong>in</strong> the 1990s and at the beg<strong>in</strong>n<strong>in</strong>g <strong>of</strong> the decade,<br />
whereas <strong>in</strong>creas<strong>in</strong>g flexibility has been high on the political agenda for the last few<br />
years. Collective barga<strong>in</strong><strong>in</strong>g is <strong>of</strong>ten said to play a substantial role <strong>in</strong> provid<strong>in</strong>g for<br />
flexicurity measures at company level and well known examples are cited as pro<strong>of</strong>, such<br />
as job placement provisions or work<strong>in</strong>g time accounts. However, to achieve these<br />
barga<strong>in</strong><strong>in</strong>g results substantial efforts <strong>in</strong>clud<strong>in</strong>g <strong>in</strong>dustrial action were needed. <strong>The</strong>y are<br />
rare <strong>in</strong> the private service sector and implementation <strong>in</strong> small and medium enterprises<br />
(SMEs) is <strong>of</strong>ten poor. <strong>The</strong> number <strong>of</strong> employers’ associations will<strong>in</strong>g to deal with<br />
flexicurity issues is rather limited. Additionally, the number <strong>of</strong> workers covered by<br />
collective agreements is decreas<strong>in</strong>g as companies quit their membership.<br />
“... <strong>The</strong> aim to counterbalance<br />
flexibility <strong>in</strong> the <strong>labour</strong> <strong>market</strong><br />
with appropriate social security<br />
measures and moreover<br />
allow<strong>in</strong>g the work<strong>in</strong>g population<br />
to take advantages <strong>of</strong> an<br />
<strong>in</strong>creased flexibility has been<br />
the guid<strong>in</strong>g idea <strong>of</strong> different<br />
works that have been on the<br />
research agenda at the WSI<br />
over the last decade.”<br />
Nevertheless, the aim to counterbalance flexibility <strong>in</strong> the <strong>labour</strong> <strong>market</strong> with appropriate<br />
social security measures and moreover allow<strong>in</strong>g the work<strong>in</strong>g population to take<br />
advantages <strong>of</strong> an <strong>in</strong>creased flexibility has been the guid<strong>in</strong>g idea <strong>of</strong> different works that<br />
have been on the research agenda at the WSI over the last decade. For example, Heide<br />
Pfarr developed a flexicurity concept for <strong>Germany</strong> to be implemented <strong>in</strong> <strong>labour</strong> law 16 .<br />
She analyses changes <strong>in</strong> <strong>labour</strong> law <strong>in</strong> the last two decades and identifies the<br />
possibilities for improv<strong>in</strong>g social security <strong>in</strong> a flexible <strong>labour</strong> <strong>market</strong>. As a result,<br />
scepticism rema<strong>in</strong>s. Additional measures were needed to counterbalance the actual<br />
flexibilisation <strong>of</strong> employment relations. WSI research also <strong>in</strong>vestigated the European<br />
“role models” <strong>of</strong> flexicurity, <strong>The</strong> Netherlands and Denmark.<br />
Denmark is regarded as the foremost real-life example <strong>of</strong> flexicurity. In Denmark, a<br />
flexible <strong>labour</strong> <strong>market</strong> is comb<strong>in</strong>ed with generous social security and active <strong>labour</strong><br />
<strong>market</strong> policies – or what has become known as the “golden triangle”. One <strong>of</strong> the ma<strong>in</strong><br />
features <strong>of</strong> the Danish employment system is a relatively low level <strong>of</strong> employment<br />
protection for employees with a standard contract. <strong>The</strong> ma<strong>in</strong> trade-<strong>of</strong>f between flexibility<br />
and security can be seen among regular (standard) workers who experience a short<br />
spell <strong>of</strong> unemployment <strong>in</strong> between two jobs. In this context, the unemployment benefit<br />
system functions as a flexibility device enhanc<strong>in</strong>g the mobility and risk will<strong>in</strong>gness <strong>of</strong> the<br />
ord<strong>in</strong>ary workforce. For those who have problems f<strong>in</strong>d<strong>in</strong>g a new job, active <strong>labour</strong><br />
<strong>market</strong> policies ideally serve to upgrade the qualifications and motivation <strong>of</strong> the<br />
<strong>in</strong>dividual, and enhance the possibilities for <strong>labour</strong> <strong>market</strong> re<strong>in</strong>tegration 17 . S<strong>in</strong>ce the<br />
majority <strong>of</strong> the workforce is easy to dismiss, Danish companies have traditionally not<br />
resorted to employ<strong>in</strong>g “atypical workers”, especially fixed-term contracts. In short, the<br />
ord<strong>in</strong>ary workforce can be considered “temporary workers” due to high job mobility and<br />
high job turnover rates 18 .<br />
16<br />
Heide Pfarr (2007) Flexicurity – E<strong>in</strong> Konzept für das Arbeitsrecht der Zukunft? WSI-Mitteilungen 08/2007,<br />
S. 416-420.<br />
17<br />
Claudia Bogedan (2009) Mehr als Flexicurity. Lehren aus der dänischen Arbeitsmarktpolitik, <strong>in</strong>: Arbeitsmarkt<br />
und Sozialpolitik; Seifert, Hartmut & Struck, Olaf (Hg.) VS Verlag für Sozialwissenschaften, Wiesbaden,<br />
S. 267-285.<br />
18<br />
Thomas Bredgaard/ Flemm<strong>in</strong>g Larsen/ Per Kongshoj Madsen/ St<strong>in</strong>e Rasmussen (2009) Flexicurity und<br />
atypische Beschäftigung <strong>in</strong> Dänemark. WSI-Mitteilungen 01/2009, S.31-38.
11<br />
“After the <strong>in</strong>dices have been<br />
constructed, a dependency<br />
between the flexibility and<br />
precariousness <strong>of</strong> work<br />
has been established with<br />
statistical certa<strong>in</strong>ty by means<br />
<strong>of</strong> regression analysis. It was<br />
further revealed that the<br />
<strong>in</strong>stitutional regulation <strong>of</strong><br />
employment does not<br />
necessarily imply an adequate<br />
effect <strong>in</strong> practice.”<br />
In the Netherlands two legal provisions ga<strong>in</strong>ed prom<strong>in</strong>ence <strong>in</strong> the “flexicurity“ debate:<br />
firstly, the “verl<strong>of</strong>spaarregel<strong>in</strong>g” (2001-2005) and secondly, the “levensloopregel<strong>in</strong>g”<br />
(s<strong>in</strong>ce January 2006). Both provisions give employees the opportunity to store time on<br />
lifetime work<strong>in</strong>g accounts and to use this time for paid leaves. Consequently they foster<br />
the equalisation <strong>of</strong> the ‚rush hour <strong>of</strong> life’. <strong>The</strong> Netherlands are the only country <strong>in</strong> Europe<br />
which has implemented a life course perspective so far. Individual and not company<br />
needs <strong>of</strong> flexibility are served 19 . Nevertheless, exist<strong>in</strong>g research po<strong>in</strong>ts at characteristic<br />
limits <strong>of</strong> both provisions. While the “verl<strong>of</strong>spaarregel<strong>in</strong>g” was only used by a rather<br />
small number <strong>of</strong> employees, particularly those, who did not face problems to comb<strong>in</strong>e<br />
work and care, the “levensloopregel<strong>in</strong>g” runs the risk <strong>of</strong> be<strong>in</strong>g reduced to an <strong>in</strong>strument<br />
for early retirement 20 .<br />
In most European countries, however, flexible work is atypical work with the risk <strong>of</strong><br />
precarious effects on work<strong>in</strong>g and liv<strong>in</strong>g conditions. Seifert and Tangian (see footnotes<br />
22 and 23) show empirically that the more flexible the employment, the more precarious<br />
it is. For this purpose, two families <strong>of</strong> <strong>in</strong>dices, <strong>of</strong> flexible work and <strong>of</strong> precarious work,<br />
are def<strong>in</strong>ed based on the Fourth European Survey <strong>of</strong> Work<strong>in</strong>g Conditions 2005 by the<br />
European Foundation for the Improvement <strong>of</strong> Liv<strong>in</strong>g and Work<strong>in</strong>g Conditions. Two<br />
methodologies <strong>of</strong> construct<strong>in</strong>g <strong>in</strong>dicators are applied, one from the Hans-Böckler-<br />
Foundation, and one from the OECD. Both methodologies give very similar results. After<br />
the <strong>in</strong>dices have been constructed, a dependency between the flexibility and<br />
precariousness <strong>of</strong> work has been established with statistical certa<strong>in</strong>ty by means <strong>of</strong><br />
regression analysis. It was further revealed that the <strong>in</strong>stitutional regulation <strong>of</strong><br />
employment does not necessarily imply an adequate effect <strong>in</strong> practice. For <strong>in</strong>stance,<br />
Turkey and Greece which both have strict employment protection legislation have high<br />
<strong>labour</strong> <strong>market</strong> flexibility due to a large proportion <strong>of</strong> employees who work with no<br />
contract. Among other th<strong>in</strong>gs, it has been shown that employment flexibility has the<br />
strongest negative effect on employability. This implies that there are serious arguments<br />
aga<strong>in</strong>st the recent reconsideration <strong>of</strong> the role <strong>of</strong> social security attempted by the<br />
European Commission with<strong>in</strong> the flexicurity discourse. <strong>The</strong> suggested shift from <strong>in</strong>come<br />
security towards high employability cannot be implemented consistently. Our study<br />
provides empirical evidence that high employability is very difficult to achieve under<br />
flexible employment 21 . <strong>The</strong> flexicurity <strong>in</strong>dicators developed at the Hans-Böckler-<br />
Foundation will help to monitor and analyse flexicurity on an empirical basis 22 .<br />
As a consequence, the views <strong>of</strong> the collective barga<strong>in</strong><strong>in</strong>g partners differ widely on the<br />
flexicurity approach. Both parties criticise the public policy measures <strong>in</strong> place which<br />
<strong>in</strong>creas<strong>in</strong>gly have been shaped by the <strong>in</strong>fluence <strong>of</strong> the employer organisations. Collective<br />
barga<strong>in</strong><strong>in</strong>g has resulted <strong>in</strong> various flexicurity provisions 23 . However, results are hard to<br />
achieve as security is low on the agenda <strong>of</strong> most employer organisations. Social<br />
problems accumulate <strong>in</strong> private service sectors, where collective barga<strong>in</strong><strong>in</strong>g is at its<br />
weakest. Trade unions thus voiced demands for more regulation, which has been<br />
rejected by the employer side.<br />
19<br />
Ute Klammer (2010) Flexibilität und Sicherheit im <strong>in</strong>dividuellen (Erwerbs-)Lebensverlauf – Zentrale<br />
Ergebnisse und politische Empfehlungen aus der Lebenslaufforschung der European Foundation, <strong>in</strong>:<br />
Gerhard Naegele (Hg.) Soziale Lebenslaufpolitik, VS Verlag. Wiesbaden, S. 675-710.<br />
20<br />
Philip Wotschack (2007) Lebenslaufpolitik <strong>in</strong> den Niederlanden. Gesetzliche Regelungen zum Ansparen längerer<br />
Freistellungen, <strong>in</strong>: Hildebrandt, E. (Hg.): Lebenslaufpolitik im Betrieb, Berl<strong>in</strong>: Edition sigma, S.241-258.<br />
21<br />
Hartmut Seifert/Andranik Tangian (2007): Flexicurity: Reconcil<strong>in</strong>g Social Security with Flexibility – Empirical<br />
F<strong>in</strong>d<strong>in</strong>gs for Europe. WSI-Diskussionspapier, Nr. 154; August 2007. Düsseldorf.<br />
22<br />
Andranik Tangian (2009): Six families <strong>of</strong> flexicurity <strong>in</strong>dicators developed at the Hans-Böckler-Foundation,<br />
WSI-Diskussionspapier, Nr. 168, November 2009. Düsseldorf.<br />
23<br />
For further <strong>in</strong>formation on co-determ<strong>in</strong>ation <strong>in</strong> <strong>Germany</strong> see: http://www.boeckler-boxen.de/1518 (<strong>in</strong> German).
12<br />
Labour law and dismissal protection<br />
Dismissal protection was at the centre <strong>of</strong> the political debate on the flexibilisation <strong>of</strong><br />
the German <strong>labour</strong> <strong>market</strong>. Empirical f<strong>in</strong>d<strong>in</strong>gs, <strong>in</strong> contrast, did not confirm the negative<br />
effects associated with the rigidity <strong>of</strong> dismissal protection. <strong>The</strong> first legislation <strong>in</strong> the<br />
context <strong>of</strong> the Hartz reforms was implemented with effect from 1 January 2004, lead<strong>in</strong>g<br />
to deregulation <strong>in</strong> the <strong>labour</strong> <strong>market</strong>. Dismissal protection was eased, <strong>in</strong>ter alia, with the<br />
aim <strong>of</strong> creat<strong>in</strong>g new employment. Major research was conducted at the WSI to analyse<br />
the consequences <strong>of</strong> these changes. <strong>The</strong> ma<strong>in</strong> results were that no new jobs were<br />
created on the basis <strong>of</strong> the new dismissal rules. Nevertheless, the newly <strong>in</strong>troduced<br />
entitlement to severance pay (Abf<strong>in</strong>dungsanspruch) might lead to a change <strong>in</strong> the<br />
behaviour <strong>of</strong> employers <strong>in</strong> the future. Moreover, the existence <strong>of</strong> an agreed procedure<br />
between the employer and the works council establish<strong>in</strong>g a list <strong>of</strong> the names <strong>of</strong> all those<br />
laid <strong>of</strong>f, <strong>in</strong>clud<strong>in</strong>g social criteria (Interessensausgleich zwischen Arbeitgeber und<br />
Betriebsrat mit Namenslisten) will reduce the number <strong>of</strong> cases brought to court 24 .<br />
“<strong>The</strong> ma<strong>in</strong> results were that<br />
no new jobs were created on<br />
the basis <strong>of</strong> the new dismissal<br />
rules. Nevertheless, the<br />
newly <strong>in</strong>troduced entitlement<br />
to severance pay<br />
(Abf<strong>in</strong>dungsanspruch) might<br />
lead to a change <strong>in</strong> the<br />
behaviour <strong>of</strong> employers <strong>in</strong> the<br />
future.”<br />
In addition the 2007 WSI survey <strong>of</strong> works councils (WSI-Betriebsrätebefragung 2007)<br />
<strong>in</strong>vestigates the works councils’ experiences with “Namenslisten” <strong>in</strong> the case <strong>of</strong><br />
dismissals. This agreed procedure between the employer and the works council<br />
establish<strong>in</strong>g a list <strong>of</strong> the names <strong>of</strong> all those laid <strong>of</strong>f can be used as an <strong>in</strong>strument by the<br />
employer when reduc<strong>in</strong>g the <strong>labour</strong> force at the enterprise level. This enables work<br />
councils to co-decide on dismissals, while at the same time dismissal protection is<br />
reduced for the <strong>in</strong>dividual. Research reveals that there are several problems connected<br />
with this <strong>in</strong>strument 25 .<br />
Moreover empirical f<strong>in</strong>d<strong>in</strong>gs prove that end<strong>in</strong>g an employment contract <strong>in</strong> <strong>Germany</strong> is<br />
neither subject to major conflict between employer and employee nor expensive. A<br />
survey conducted by the WSI among human resource managers underl<strong>in</strong>es that<br />
dismissal protection is not a h<strong>in</strong>drance if either the employer or employee wants to end<br />
the employment relationship. <strong>The</strong> majority <strong>of</strong> respondents reported that dismissal<br />
protection is not a h<strong>in</strong>drance to employ<strong>in</strong>g new persons. In sum, the results <strong>of</strong> the survey<br />
underl<strong>in</strong>e that neither a preventive nor a prohibitive effect <strong>of</strong> dismissal protection can<br />
be observed 26 .<br />
Nevertheless <strong>in</strong> the light <strong>of</strong> the <strong>in</strong>stitutional framework <strong>of</strong> the German model dismissal<br />
protection is an <strong>in</strong>tegral part and constitutes advantages <strong>in</strong> the complex <strong>in</strong>terplay with<br />
other <strong>labour</strong> <strong>market</strong> <strong>in</strong>stitutions 27 . Thus, most employers act on basis <strong>of</strong> false<br />
assumptions when they argue for less dismissal protection. Moreover, by deregulat<strong>in</strong>g<br />
dismissal protection social security is negatively affected without any positive effects on<br />
employment 28 .<br />
24<br />
Arm<strong>in</strong> Höland/Ute Kahl/ Karen Ullmann/ Nad<strong>in</strong>e Zeibig (2004): Recht und Wirklichkeit der Kündigung von<br />
Arbeitsverhältnissen – Erste Erkenntnisse aus der Forschung, <strong>in</strong>: WSI-Mitteilungen 03/2004.<br />
25<br />
Stefanie Kremer/Nad<strong>in</strong>e Zeibig (2008): Namenslisten bei Entlassungen – Ambivalentes Mittel für Betriebsräte<br />
WSI-Mitteilungen 06/2008, S.321-327.<br />
26<br />
Silke Bothfeld/Karen Ullmann (2004): Kündigungsschutz <strong>in</strong> der betrieblichen Praxis: Nicht Schreckgespenst<br />
sondern Sündenbock, <strong>in</strong>: WSI-Mitteilungen 05/2004.<br />
27<br />
Heide Pfarr (2007): Kündigungsschutz – fürs Arbeitsleben unverzichtbar, <strong>in</strong>: Arbeitsrecht im Betrieb, Heft<br />
10/2007, S.561.<br />
28<br />
Heide Pfarr/Nad<strong>in</strong>e Zeibig (2006): Abf<strong>in</strong>dungen statt Kündigungsschutz? – Reformvorschläge vom<br />
Kronberger Kreis, Sachverständigenrat und Hamburger Dreisprung, <strong>in</strong>: WSI Mitteilungen 08/2006. Further<br />
<strong>in</strong>formation (<strong>in</strong> German) can be found on the Hans-Böckler-Foundation’s website: http://www.boecklerboxen.de/2191.htm
13<br />
“...we should pay more<br />
attention towards tak<strong>in</strong>g<br />
advantage <strong>of</strong> the opportunities<br />
<strong>in</strong>herent <strong>in</strong> changes <strong>in</strong> paid<br />
employment and keep the<br />
correspond<strong>in</strong>g risks <strong>in</strong> check,<br />
<strong>in</strong>tervention is necessary <strong>in</strong><br />
terms <strong>of</strong> employment and<br />
equal opportunities policy,<br />
<strong>in</strong> l<strong>in</strong>e with the realities <strong>of</strong><br />
pluralism <strong>in</strong> the workplace.<br />
Empirical research can provide<br />
useful guidel<strong>in</strong>es here.”<br />
Future challenges<br />
Labour <strong>market</strong> developments <strong>in</strong> <strong>Germany</strong>, such as the extension <strong>of</strong> atypical work like<br />
part-time and fixed-term work, highlight the need for adaptations <strong>in</strong> the social security<br />
systems. Grow<strong>in</strong>g <strong>in</strong>equality <strong>in</strong> earn<strong>in</strong>gs as well as <strong>in</strong>creas<strong>in</strong>g poverty pose problems for<br />
the German welfare state. German social <strong>in</strong>surances, especially the old-age pension,<br />
are a mirror image <strong>of</strong> the relative position <strong>in</strong> the <strong>labour</strong> <strong>market</strong> and <strong>in</strong>come over a<br />
lifetime. Thus, the weaker the position <strong>in</strong> the <strong>labour</strong> <strong>market</strong>, the more are future<br />
pensioners <strong>in</strong> <strong>Germany</strong> fac<strong>in</strong>g the risk <strong>of</strong> poverty.<br />
<strong>The</strong>re is a strong gender dimension to the problem as <strong>labour</strong> <strong>market</strong> policies have<br />
<strong>in</strong>creased the employment rate by promot<strong>in</strong>g part-time work and m<strong>in</strong>i-jobs for women<br />
and as collective barga<strong>in</strong><strong>in</strong>g is at its weakest <strong>in</strong> female dom<strong>in</strong>ated service sectors.<br />
Consider<strong>in</strong>g wage rates <strong>in</strong> female pr<strong>of</strong>essions, even standard part-time work does not<br />
pay enough to make a liv<strong>in</strong>g nor does it provide for sufficient unemployment allowances<br />
and retirement pensions.<br />
Moreover, policies that consider rapid job-switches as a flexicurity approach ignore the<br />
effects on the <strong>in</strong>dividual and on society. <strong>The</strong>refore, policies putt<strong>in</strong>g an emphasis on this<br />
type <strong>of</strong> flexibility should be rejected.<br />
Instead, we should pay more attention towards tak<strong>in</strong>g advantage <strong>of</strong> the opportunities<br />
<strong>in</strong>herent <strong>in</strong> changes <strong>in</strong> paid employment and keep the correspond<strong>in</strong>g risks <strong>in</strong> check,<br />
<strong>in</strong>tervention is necessary <strong>in</strong> terms <strong>of</strong> employment and equal opportunities policy, <strong>in</strong> l<strong>in</strong>e<br />
with the realities <strong>of</strong> pluralism <strong>in</strong> the workplace. Empirical research can provide useful<br />
guidel<strong>in</strong>es here. Such research is required to identify typical features <strong>of</strong> the complex<br />
changes <strong>in</strong> the world <strong>of</strong> work and <strong>in</strong> society and to determ<strong>in</strong>e their impact.<br />
<strong>The</strong> most important start<strong>in</strong>g po<strong>in</strong>t <strong>in</strong> defeat<strong>in</strong>g poverty is thereby the <strong>in</strong>troduction <strong>of</strong><br />
reforms to limit the growth <strong>of</strong> low-paid employment. Moreover it is necessary to <strong>in</strong>stall<br />
a national m<strong>in</strong>imum wage, although m<strong>in</strong>imum wages alone are not a guarantee <strong>of</strong> low<br />
rates <strong>of</strong> poverty as EU comparisons show. <strong>The</strong>refore additional changes <strong>in</strong> the social<br />
security system are needed. <strong>The</strong> German <strong>in</strong>surance system is <strong>in</strong> need <strong>of</strong> reforms which<br />
make use <strong>of</strong> it strength and eradicate its weaknesses 29 .<br />
29<br />
Claudia Bogedan/ Simone Leiber (2009) Fit für die Zukunft: Vorschläge für e<strong>in</strong>e moderne Sozialversicherung,<br />
WSI-Mitteilungen 07/2009, S. 400-401.
14<br />
Part 2<br />
Migrant women <strong>in</strong> care jobs: legal framework and<br />
work<strong>in</strong>g conditions <strong>in</strong> <strong>Germany</strong> by Mathias Maucher<br />
(SOLIDAR) *<br />
Features <strong>of</strong> provider structures and f<strong>in</strong>anc<strong>in</strong>g<br />
<strong>in</strong> the elderly and nurs<strong>in</strong>g care sector<br />
A comparative study (cf. Simonazzi 2008) on “care regimes and national employment<br />
models” based on common welfare state typologies places <strong>Germany</strong>, France, Luxemburg<br />
and Austria <strong>in</strong> the same country group. In these countries, elderly and long-term care<br />
systems share one central characteristic: dependence on care is understood as be<strong>in</strong>g<br />
a new form <strong>of</strong> social risk affect<strong>in</strong>g the population as a whole, and this risk is met by a<br />
new system <strong>of</strong> social <strong>in</strong>surance – the contribution-based nurs<strong>in</strong>g and long-term care<br />
<strong>in</strong>surance scheme. <strong>The</strong>re are three other country groups <strong>in</strong> the comparison: one<br />
dom<strong>in</strong>ated by tax-f<strong>in</strong>anced systems (e.g. Denmark, F<strong>in</strong>land, Ireland, Sweden, United<br />
K<strong>in</strong>gdom), one where the risk is met primarily on the basis <strong>of</strong> need-based social welfare<br />
systems (the Mediterranean countries), and the last, where family solidarity constitutes<br />
the dom<strong>in</strong>at<strong>in</strong>g element.<br />
In terms <strong>of</strong> the relative weight <strong>of</strong> types <strong>of</strong> providers <strong>of</strong> elderly and long-term care, both<br />
for patients at home and for those <strong>in</strong> nurs<strong>in</strong>g care <strong>in</strong>stitutions, the situation <strong>in</strong> Europe<br />
around the middle <strong>of</strong> this last decade is quite a diverse one, with the overall trend be<strong>in</strong>g<br />
towards an <strong>in</strong>crease <strong>in</strong> non-public provision. In <strong>Germany</strong> the provider distribution for<br />
home and <strong>in</strong>stitutional care is as follows: public operators 2% and 7% respectively, nonpr<strong>of</strong>it<br />
operators 43% and 56%, and commercial providers 55% and 37%. We see, then,<br />
that commercial operators dom<strong>in</strong>ate <strong>in</strong> the area <strong>of</strong> home-care services and that nonpr<strong>of</strong>it<br />
operators tend to provide a greater share <strong>of</strong> residential care, while publicly run<br />
schemes constitute no more than a marg<strong>in</strong>al factor <strong>in</strong> both cases. In Austria, on the<br />
other hand, public and non-pr<strong>of</strong>it operators dom<strong>in</strong>ate clearly, with a 90% share <strong>of</strong> care<br />
services provided <strong>in</strong> patients' homes and a 51% and 27% respective share <strong>of</strong> the <strong>market</strong><br />
<strong>in</strong> the area <strong>of</strong> <strong>in</strong>stitutional care. Commercial providers, on the other hand, account for<br />
a mere 10% and 22% <strong>of</strong> the <strong>market</strong> respectively.<br />
*<br />
This part <strong>of</strong> the country survey for <strong>Germany</strong> supplements the analysis made by the<br />
Hans Böckler Foundation on the ma<strong>in</strong> changes tak<strong>in</strong>g place <strong>in</strong> the German <strong>labour</strong><br />
<strong>market</strong> <strong>in</strong> the face <strong>of</strong> current challenges and on the measures taken <strong>in</strong> the context <strong>of</strong> the<br />
<strong>crisis</strong>. <strong>The</strong> present article presents a specific sector and target group: it <strong>of</strong>fers a<br />
summary <strong>of</strong> the work<strong>in</strong>g conditions <strong>of</strong> female migrants 30 <strong>in</strong> care jobs, and an overview<br />
<strong>of</strong> related legal issues 31 . <strong>The</strong> primary purpose <strong>of</strong> the present article is more to gather<br />
and present exist<strong>in</strong>g <strong>in</strong>formation than to analyse the f<strong>in</strong>d<strong>in</strong>gs 32 , and the article is based<br />
on text passages taken from various publications.<br />
30<br />
As most <strong>of</strong> the migrants work<strong>in</strong>g <strong>in</strong> domiciliary and nurs<strong>in</strong>g services are women, this article refers primarily<br />
to female workers, even though more neutral forms are used for the sake <strong>of</strong> simplicity.<br />
31<br />
In some cases comparisons will be made with Austria, the EU country most similar to <strong>Germany</strong> <strong>in</strong> terms <strong>of</strong><br />
its <strong>in</strong>stitutional structures and cultural circumstances.<br />
32<br />
This study has <strong>in</strong>cluded and evaluated <strong>in</strong>ternal documents <strong>of</strong> federations <strong>of</strong> welfare <strong>in</strong>stitutions <strong>in</strong> both<br />
<strong>Germany</strong> (AWO, DCV) and Austria (Volkshilfe).<br />
© ISCOS
15<br />
“Particularly <strong>in</strong> the non-public<br />
area, the proportion <strong>of</strong> lowskilled<br />
and low-paid workers<br />
has <strong>in</strong>creased over the last few<br />
years as a result <strong>of</strong> higher cost<br />
pressure; <strong>in</strong> some <strong>in</strong>stitutions<br />
it is now significantly higher<br />
than the 50% share <strong>of</strong> qualified<br />
workers per <strong>in</strong>stitution<br />
stipulated by law.”<br />
Characteristics <strong>of</strong> the <strong>labour</strong> <strong>market</strong> <strong>in</strong> the area<br />
<strong>of</strong> assistance and care for the elderly<br />
<strong>The</strong> <strong>labour</strong> <strong>market</strong> <strong>in</strong> the area <strong>of</strong> elderly assistance and care is characterised by the<br />
follow<strong>in</strong>g features apply<strong>in</strong>g to <strong>Germany</strong> and Austria (based largely on Simonazzi 2008):<br />
• Payment, work<strong>in</strong>g conditions and <strong>in</strong>dustrial relations 33 :<br />
1) Predom<strong>in</strong>antly low wages and low status, paired with above-average fluctuation;<br />
2) Vary<strong>in</strong>g scope <strong>of</strong> coverage by wage agreements, particularly among private providers;<br />
3) Fragmentation <strong>of</strong> trade union representation, <strong>of</strong>ten along the l<strong>in</strong>e <strong>of</strong> tasks and<br />
qualification levels <strong>of</strong> employees as well as <strong>of</strong> employers and their associations;<br />
4) Wage negotiations <strong>of</strong>ten decentralised. All these characteristics are structural <strong>in</strong><br />
nature, as they are the result <strong>of</strong> <strong>chang<strong>in</strong>g</strong> trends <strong>in</strong> our work<strong>in</strong>g society; as such, they<br />
also affect local workers who are German citizens. Basically, therefore, these factors<br />
are not <strong>in</strong>fluenced by economic migration. However, repercussions are <strong>in</strong>evitable if<br />
economic migration <strong>in</strong>creases, and <strong>of</strong> course this does not improve the overall situation.<br />
• Qualification and on-the-job tra<strong>in</strong><strong>in</strong>g: Scand<strong>in</strong>avian countries are the best <strong>in</strong> Europe;<br />
<strong>Germany</strong> and Austria have well-established, extensive and differentiated tra<strong>in</strong><strong>in</strong>g<br />
systems with a number <strong>of</strong> recognised vocational qualifications; high qualification levels<br />
and ongo<strong>in</strong>g tra<strong>in</strong><strong>in</strong>g options for employees at the upper end <strong>of</strong> the qualification scale.<br />
• Proportion <strong>of</strong> low-skilled and low-paid workers: Particularly <strong>in</strong> the non-public area, the<br />
proportion <strong>of</strong> low-skilled and low-paid workers has <strong>in</strong>creased over the last few years as<br />
a result <strong>of</strong> higher cost pressure; <strong>in</strong> some <strong>in</strong>stitutions it is now significantly higher than<br />
the 50% share <strong>of</strong> qualified workers per <strong>in</strong>stitution stipulated by law. Increased demand,<br />
especially <strong>in</strong> the last decade, has also created a parallel “<strong>market</strong>” for migrants – for the<br />
most part women from Central and Eastern Europe who are not <strong>in</strong>frequently <strong>in</strong> irregular<br />
employment. <strong>The</strong> sector is therefore characterised by a high degree <strong>of</strong> segmentation<br />
with regard to qualification levels, status, payment, work<strong>in</strong>g conditions, contractual<br />
conditions <strong>of</strong> employment and residence status.<br />
• In comparison with Great Brita<strong>in</strong> and Sweden, the greatest challenge fac<strong>in</strong>g <strong>Germany</strong> 34<br />
is not a shortage <strong>of</strong> workers overall but a shortage <strong>of</strong> skilled workers. <strong>The</strong> second major<br />
issue is – as everywhere <strong>in</strong> Europe – the affordability <strong>of</strong> elderly assistance and care<br />
services, particularly for <strong>in</strong>tensive or 24-hour care, and the affordability <strong>of</strong> domiciliary<br />
services for persons <strong>in</strong> need <strong>of</strong> care.<br />
• <strong>The</strong> “regularisation” <strong>of</strong> workers from the ten Central and Eastern European countries<br />
that jo<strong>in</strong>ed the EU <strong>in</strong> 2004 and 2007, i.e. their freedom <strong>of</strong> movement and right <strong>of</strong><br />
establishment (after expiry <strong>of</strong> restrictions and transitional phases), has resulted <strong>in</strong> a<br />
“change <strong>of</strong> direction” among persons work<strong>in</strong>g <strong>in</strong> the elderly assistance and care sector<br />
and encouraged economic migration with shorter phases <strong>of</strong> stay <strong>in</strong> the country <strong>of</strong><br />
dest<strong>in</strong>ation 35 ; this has been accompanied by <strong>in</strong>itiatives for the regularisation <strong>of</strong> persons<br />
33<br />
In 2007, <strong>in</strong> the sector <strong>of</strong> health services and social services we saw the follow<strong>in</strong>g proportions compared to the<br />
average shares <strong>of</strong> the overall economy: 1) proportion <strong>of</strong> full-time employees with permanent contracts: 43% and 42%<br />
respectively, versus 54%; 2) proportion <strong>of</strong> low-paid employees: 28% and 21% versus 25% (Eichhorst et al. 2010:29)<br />
34<br />
A. Simonazzi's article conta<strong>in</strong>s a great deal <strong>of</strong> additional <strong>in</strong>formation on the situation, the problems and solutions<br />
<strong>in</strong> the United K<strong>in</strong>gdom, and compares these primarily with the situation <strong>in</strong> <strong>Germany</strong>, France, Italy, Austria and<br />
the Scand<strong>in</strong>avian countries. She also discusses possible scenarios for the near future. UNISON (undated) also<br />
describes the problems these developments pose for trade union activities and for the organisation and<br />
representation <strong>of</strong> immigrants employed <strong>in</strong> the social services and health sector.<br />
35<br />
“In Portugal, for <strong>in</strong>stance, the share <strong>of</strong> immigrants from Eastern Europe – which had been extremely high<br />
because <strong>of</strong> the relatively low cost <strong>of</strong> obta<strong>in</strong><strong>in</strong>g a visa – has dim<strong>in</strong>ished <strong>in</strong> favour <strong>of</strong> immigrants from Lat<strong>in</strong><br />
America. Eastern European workers are now mov<strong>in</strong>g <strong>in</strong> large numbers to the richer <strong>labour</strong> <strong>market</strong>s <strong>of</strong> the<br />
Northern European countries.” (Simonazzi 2008:19)
16<br />
who until now had irregular work and residence status, e.g. <strong>in</strong> Italy (cf. also SOLIDAR<br />
Brief<strong>in</strong>g no. 18). This, however, also has an effect on <strong>in</strong>dividuals' tendency to rema<strong>in</strong> <strong>in</strong><br />
this type <strong>of</strong> employment as well as on any <strong>in</strong>vestment they themselves or their<br />
employers may consider to improve their qualification levels 36 .<br />
• Hav<strong>in</strong>g similar welfare arrangements <strong>in</strong> the area <strong>of</strong> assistance and care for the elderly,<br />
Austria and <strong>Germany</strong> also share both formal and <strong>in</strong>formal <strong>labour</strong> <strong>market</strong> elements,<br />
whereby <strong>in</strong> Austria the proportion <strong>of</strong> migrants is higher 37 .<br />
• Whereas <strong>in</strong> the year 2000 personnel costs made up approximately 75% <strong>of</strong> costs <strong>in</strong> the<br />
area <strong>of</strong> elderly assistance and care, today this proportion has, <strong>in</strong> places, fallen below<br />
50%. (ver.di 2010c)<br />
“Between 1999 and 2007,<br />
the number <strong>of</strong> persons <strong>in</strong> need<br />
<strong>of</strong> nurs<strong>in</strong>g or other special care<br />
who were actually receiv<strong>in</strong>g<br />
home care rose significantly<br />
from approximately 415,000<br />
to 504,000, correspond<strong>in</strong>g to<br />
an <strong>in</strong>crease <strong>of</strong> roughly 21.3%.”<br />
• Between 1999 and 2007, the number <strong>of</strong> persons <strong>in</strong> need <strong>of</strong> nurs<strong>in</strong>g or other special care<br />
who were actually receiv<strong>in</strong>g home care rose significantly from approximately 415,000 to<br />
504,000, correspond<strong>in</strong>g to an <strong>in</strong>crease <strong>of</strong> roughly 21.3% (Neuhaus et al. 2009:25)<br />
General data on migrant care workers<br />
• In <strong>Germany</strong>, women and persons from migrant families or economic migrants <strong>of</strong>ten<br />
tend to be part-time employees work<strong>in</strong>g at low wage levels (FES 2006; Schmid/Protsch<br />
2009; Kal<strong>in</strong>a/We<strong>in</strong>kopf 2010); low pay is also a characteristic <strong>of</strong> jobs <strong>in</strong> the sector <strong>of</strong><br />
assistance and care for the elderly, which is the subject <strong>of</strong> this study.<br />
• <strong>The</strong> follow<strong>in</strong>g can be said about the proportion <strong>of</strong> migrants to overall employees and about<br />
the volume <strong>of</strong> hours worked by migrant care workers: “In 2005, about 214,000 people (87%<br />
women) were work<strong>in</strong>g <strong>in</strong> the field <strong>of</strong> household-based long-term care services, 56,000 full<br />
time, 151,000 part time, 7,000 under other arrangements. It is estimated that about 100,000<br />
people are work<strong>in</strong>g as undocumented migrants. In other words: roughly one third <strong>of</strong> the<br />
non-family/non-<strong>in</strong>formal car<strong>in</strong>g work is done outside contractual arrangements<br />
recognised, regulated and (co-)funded by the long-term care <strong>in</strong>surance and uncovered by<br />
(standard) <strong>in</strong>dividual and collective <strong>labour</strong> rights.” (Maucher 2009:12)<br />
• <strong>The</strong>se figures are supported by a survey conducted by the German Institute <strong>of</strong> Applied<br />
Nurs<strong>in</strong>g Research [Deutsches Institut für angewandte Pflegeforschung e.V., “dip”]<br />
which postulates a rough figure <strong>of</strong> 100,000 workers and a potential <strong>of</strong> 145,000 user<br />
households. 88% <strong>of</strong> the persons be<strong>in</strong>g cared for are <strong>in</strong> their 80s or older. <strong>The</strong> ma<strong>in</strong> need<br />
for support is <strong>in</strong> the area <strong>of</strong> domiciliary services. (Neuhaus et al. 2009:9f)<br />
• An article on elderly care published <strong>in</strong> the German weekly “Die Zeit” on 22 November<br />
2007 (“Altenpflege: E<strong>in</strong>e grosse deutsche Lüge” – Elderly care: a big German lie –<br />
36<br />
“For migrants with a temporary migratory project, regularisation <strong>of</strong> their employment position may have little<br />
appeal if they can trade it for higher wages. <strong>The</strong>re is evidence that <strong>in</strong> Italy, with its matur<strong>in</strong>g ‘migrant carer<br />
model’, the grey <strong>market</strong> has been prompt to exploit this model’s greater social acceptance by ‘only just’<br />
undercutt<strong>in</strong>g regular workers, thus skimm<strong>in</strong>g the <strong>market</strong> and threaten<strong>in</strong>g once aga<strong>in</strong> to squeeze lower-middle<br />
<strong>in</strong>come families out <strong>of</strong> paid care, were it not for monetary transfers and social subsidies. <strong>The</strong> duration <strong>of</strong> the<br />
migratory project may also affect the career progression and development <strong>of</strong> immigrants, because neither the<br />
employer nor the workers <strong>in</strong>vest <strong>in</strong> their tra<strong>in</strong><strong>in</strong>g.” (Simonazzi 2008:19)<br />
37<br />
“Through their use <strong>of</strong> monetary transfers to promote <strong>in</strong>formal/family carers, <strong>Germany</strong> and Austria comb<strong>in</strong>e<br />
features <strong>of</strong> both formal and <strong>in</strong>formal <strong>market</strong>s. In Austria, cash benefits, coupled with little regulatory oversight,<br />
a tradition <strong>of</strong> home care, and the permeability <strong>of</strong> the country’s Eastern borders (due also to historical ties) have<br />
encouraged a large <strong>in</strong>flux <strong>of</strong> migrant carers, many <strong>of</strong> whom are illegal but are openly recruited by agencies for<br />
short-term, rotat<strong>in</strong>g care duties. In <strong>Germany</strong>, <strong>in</strong> spite <strong>of</strong> the prevalence <strong>of</strong> unconditional cash benefits, reliance<br />
on illegal foreign workers does not yet seem to have reached similar proportions. A strongly regulated <strong>market</strong><br />
for skilled <strong>labour</strong>, comb<strong>in</strong>ed with their use <strong>of</strong> monetary transfers to <strong>in</strong>centivise <strong>in</strong>formal family carers, justifies<br />
their <strong>in</strong>clusion <strong>in</strong> a ‘mixed’ cluster to take account <strong>of</strong> the coexistence <strong>of</strong> formal and <strong>in</strong>formal care <strong>market</strong>s,<br />
albeit with differ<strong>in</strong>g reliance on foreign m<strong>in</strong>ders.” (Simonazzi 2008:18)<br />
© ISCOS
17<br />
“Many <strong>of</strong> the Central and<br />
Eastern European women<br />
are well qualified <strong>in</strong> their<br />
orig<strong>in</strong>al pr<strong>of</strong>essions and <strong>of</strong>ten<br />
f<strong>in</strong>d themselves do<strong>in</strong>g not<br />
much more than clean<strong>in</strong>g,<br />
cook<strong>in</strong>g, shopp<strong>in</strong>g and provid<strong>in</strong>g<br />
basic care at a level authorised<br />
by the employment <strong>of</strong>fice<br />
for persons employed as<br />
home helpers.”<br />
http://www.zeit.de/2007/48/Pflege), presents the follow<strong>in</strong>g calculation: “<strong>The</strong> nurs<strong>in</strong>g<br />
and long-term care <strong>in</strong>surance scheme spends approximately 630 million euros per year<br />
on 100,000 persons <strong>in</strong> need <strong>of</strong> care who are be<strong>in</strong>g cared for at home, and 1.51 billion for<br />
the same number <strong>of</strong> persons <strong>in</strong> <strong>in</strong>stitutional care. Without the illegal workers who care<br />
for an estimate <strong>of</strong> well over 100,000 elderly Germans, it would therefore have to spend<br />
roughly one billion euros more.” (Neuhaus et al. 2009:31)<br />
• Irregular migrants employed <strong>in</strong> private households <strong>of</strong>fer a particularly significant cost<br />
advantage, because employ<strong>in</strong>g them <strong>in</strong>volves no ancillary wage costs: accord<strong>in</strong>g to<br />
estimates, <strong>in</strong> and around 2006 they earned an average <strong>of</strong> € 600 to € 800 per month<br />
(exclud<strong>in</strong>g room and board) 38 . If legally employed local skilled workers were to provide<br />
the care, this amount would be at least five <strong>times</strong> higher, and even more for patients<br />
requir<strong>in</strong>g 24-hour care. <strong>The</strong> situation <strong>in</strong> Austria is similar: accord<strong>in</strong>g to estimates,<br />
hourly wages <strong>of</strong> € 7 are paid <strong>in</strong> the first case, vis-à-vis € 24 for a skilled careworker. In<br />
<strong>Germany</strong>, 24-hour care provided by nurs<strong>in</strong>g services employ<strong>in</strong>g pr<strong>of</strong>essional personnel<br />
costs between € 3,000 and € 5,000 per month <strong>in</strong> 2006 39 – an unaffordable expense for<br />
most patients and their families, even if benefits under the nurs<strong>in</strong>g and long-term care<br />
<strong>in</strong>surance scheme are factored <strong>in</strong> (the care benefits; and even <strong>in</strong> cases where non-cash<br />
benefits are also granted), particularly as any additional treatment that may be required<br />
is not generally covered by the long-term care <strong>in</strong>surance.<br />
• Many <strong>of</strong> the Central and Eastern European women are well qualified <strong>in</strong> their orig<strong>in</strong>al<br />
pr<strong>of</strong>essions and <strong>of</strong>ten f<strong>in</strong>d themselves do<strong>in</strong>g not much more than clean<strong>in</strong>g, cook<strong>in</strong>g,<br />
shopp<strong>in</strong>g and provid<strong>in</strong>g basic care at a level authorised by the employment <strong>of</strong>fice for<br />
persons employed as home helpers. Depend<strong>in</strong>g on the state, they receive between € 967<br />
and € 1,177 per month and are covered under the health, pension and unemployment<br />
<strong>in</strong>surance schemes, without however be<strong>in</strong>g entitled to unemployment benefits. Even<br />
though collectively agreed work<strong>in</strong>g time is 38.5 hours per week, many <strong>of</strong> these women<br />
are responsible for the patients <strong>in</strong> their care around the clock (Schmidt 2005:55). Not<br />
all <strong>of</strong> them have a liv<strong>in</strong>g area <strong>of</strong> their own. Asked about their wishes, all <strong>of</strong> them name<br />
compliance with set work<strong>in</strong>g hours – there are, it seems, quite a few cases where the<br />
work<strong>in</strong>g hours laid down <strong>in</strong> the contract do not match the time actually worked – and<br />
weekends <strong>of</strong>f from time to time (Schmidt 2005:56f).<br />
38<br />
Other estimates support<strong>in</strong>g these figures were found <strong>in</strong> additional bibliographical research: “Migrant carers, <strong>in</strong><br />
particular from Poland, the Czech Republic and Slovakia, are liv<strong>in</strong>g <strong>in</strong> thousands <strong>of</strong> German households and are<br />
<strong>in</strong>volved <strong>in</strong> 24/7 care and household work. Individuals or families employ<strong>in</strong>g them on average pay 800 to 1,000<br />
€ per month, with board and lodg<strong>in</strong>g <strong>in</strong>cluded.” (Maucher 2009:12)<br />
39<br />
Accord<strong>in</strong>g to a 2005 estimate, costs for this type <strong>of</strong> care provided by persons <strong>in</strong> a regular employment<br />
relationship ranged between € 2,560 and € 4,090, four to six <strong>times</strong> more than the care benefits for patients at<br />
care level III.
18<br />
Sector-specific pay and coverage by collective<br />
wage agreements <strong>in</strong> <strong>Germany</strong><br />
• Ver.di notes three tendencies (ver.di 2010b):<br />
1) Fewer employment relationships are governed by collective wage agreements;<br />
2) Exist<strong>in</strong>g collective wage agreements are sidestepped;<br />
3) A number <strong>of</strong> providers “try to counteract the f<strong>in</strong>ancial pressure by allow<strong>in</strong>g work<strong>in</strong>g<br />
conditions to deteriorate and employ<strong>in</strong>g less qualified personnel. More than one fifth<br />
<strong>of</strong> all home-care workers (22 per cent) are employed on the basis <strong>of</strong> so-called ‘m<strong>in</strong>ijobs’.<br />
<strong>The</strong> proportion <strong>of</strong> precarious employment <strong>in</strong> the home care <strong>market</strong> is<br />
significantly higher than for persons work<strong>in</strong>g <strong>in</strong> <strong>in</strong>stitutional care (10 per cent).<br />
However, there is a grow<strong>in</strong>g tendency towards limited part-time work/<strong>in</strong>cidental<br />
employment <strong>in</strong> both areas” (ver.di 2010b).<br />
“In the former West <strong>Germany</strong>,<br />
carers must now be paid at<br />
least € 8.50 per hour, while <strong>in</strong><br />
the eastern part <strong>of</strong> the country<br />
the m<strong>in</strong>imum is € 7.50.<br />
On 1 January 2012 and on<br />
1 July 2013, the wage floor will<br />
be <strong>in</strong>creased by approximately<br />
€ 0.25 <strong>in</strong> east and west alike.”<br />
• Accord<strong>in</strong>g to the German Federation <strong>of</strong> Members <strong>of</strong> the Nurs<strong>in</strong>g Pr<strong>of</strong>essions<br />
[Berufsverband for Pflegeberufe, DBfK], roughly one third <strong>of</strong> carers work for unethical<br />
wages, especially those whose employers are not bound by collective agreements.<br />
“More than anyth<strong>in</strong>g else, the extreme competitive pressure from commercial<br />
providers and their wage-dump<strong>in</strong>g policies when hir<strong>in</strong>g carers had caught the<br />
attention <strong>of</strong> charitable associations. In March 2008, several employer organisations<br />
followed the lead <strong>of</strong> the Workers' Welfare Organisation [Arbeiterwohlfahrt, AWO] and<br />
jo<strong>in</strong>ed forces with ver.di to demand the <strong>in</strong>clusion <strong>of</strong> caregiver services <strong>in</strong> the Employee<br />
Post<strong>in</strong>g Act [Arbeitnehmer-Entsendegesetz, AEntG]” (DGB 2010). <strong>The</strong> Association <strong>of</strong><br />
Local Government Employer Organisations [Vere<strong>in</strong>igung der kommunalen<br />
Arbeitgeberverbände, VkA] also jo<strong>in</strong>ed the <strong>in</strong>itiative.<br />
• Its result: a permanent and unrestricted m<strong>in</strong>imum wage and therefore a legally<br />
b<strong>in</strong>d<strong>in</strong>g wage floor for some 565,000 workers, <strong>in</strong> force <strong>in</strong> <strong>Germany</strong> s<strong>in</strong>ce 1 August 2010.<br />
In the former West <strong>Germany</strong>, carers must now be paid at least € 8.50 per hour, while<br />
<strong>in</strong> the eastern part <strong>of</strong> the country the m<strong>in</strong>imum is € 7.50. On 1 January 2012 and on 1<br />
July 2013, the wage floor will be <strong>in</strong>creased by approximately € 0.25 <strong>in</strong> east and west<br />
alike. “<strong>The</strong> care <strong>market</strong> is characterised by ‘cut-throat competition <strong>in</strong> certa<strong>in</strong> sectors’,<br />
says Ra<strong>in</strong>er Brückers, former chairman <strong>of</strong> the AWO national board <strong>of</strong> management,<br />
add<strong>in</strong>g that ‘the wage spiral has been sp<strong>in</strong>n<strong>in</strong>g dangerously downwards for years 40 ’.<br />
Low wages constitute a risk for the quality <strong>of</strong> care services. <strong>The</strong> m<strong>in</strong>imum wage will<br />
help keep the ‘cheap at all costs’ pr<strong>in</strong>ciple <strong>in</strong> check” adds Brückers (DGB 2010),<br />
chairman <strong>of</strong> the commission appo<strong>in</strong>ted by the Federal M<strong>in</strong>istry <strong>of</strong> Labour and Social<br />
Affairs to set a m<strong>in</strong>imum wage.<br />
40<br />
In spite <strong>of</strong> strong resistance (com<strong>in</strong>g above all from commercial providers), the Employee Post<strong>in</strong>g Act was<br />
expanded to <strong>in</strong>clude “Work<strong>in</strong>g conditions <strong>in</strong> the care sector” as Part 4 <strong>of</strong> the Act. <strong>The</strong>se provisions stipulate<br />
that the Federal M<strong>in</strong>istry <strong>of</strong> Labour and Social Affairs must appo<strong>in</strong>t an equal-representation commission<br />
<strong>in</strong>clud<strong>in</strong>g employee and employer representatives, with the goal that a m<strong>in</strong>imum wage should be agreed by a<br />
majority <strong>of</strong> at least 75%. This commission should <strong>in</strong>clude members <strong>of</strong> the competent trade unions and employer<br />
federations <strong>in</strong> the care sector as well as Caritas and Diakonie.<br />
© ISCOS
19<br />
“Many carers from the EU<br />
accession countries have<br />
set themselves up as selfemployed<br />
workers <strong>in</strong> their<br />
home countries (<strong>in</strong>dependent<br />
entrepreneurs), so that they<br />
have health <strong>in</strong>surance and<br />
social security. <strong>The</strong> German<br />
family must conclude a service<br />
or work contract with the<br />
foreign worker. This means<br />
the relationship is not an<br />
“employer-employee<br />
relationship” but a “clientcontractor<br />
relationship”.”<br />
Legal issues surround<strong>in</strong>g the employment <strong>of</strong><br />
foreign home helpers and carers 41<br />
In order to work <strong>in</strong> <strong>Germany</strong>, Central and Eastern European workers need an EU work<br />
permit, which, however, the Federal Employment Agency [Bundesagentur für Arbeit,<br />
BA] does not grant for home-care services and home-care givers. This means that<br />
dur<strong>in</strong>g the transitional regulations <strong>in</strong> force until 2011 private persons cannot legally<br />
conclude employment contracts with carers from Central or Eastern Europe. Families<br />
therefore cannot <strong>of</strong>fer employment <strong>in</strong> this field directly and act as employers.<br />
In order to legally hire someone from Central or Eastern Europe <strong>in</strong> the domestic<br />
services sector, one <strong>of</strong> the four options outl<strong>in</strong>ed below must therefore be chosen.<br />
• Referral <strong>of</strong> home helpers by the central <strong>of</strong>fice for foreign and pr<strong>of</strong>essional workers (ZAV)<br />
<strong>of</strong> the Federal Employment Agency. ZAV allows men and women from Bulgaria, Poland,<br />
Romania, the Slovak Republic, Slovenia, the Czech Republic and Hungary to work<br />
regularly for three years <strong>in</strong> households with persons need<strong>in</strong>g care. An unrestricted EU<br />
work permit may be applied for after 12 months <strong>of</strong> un<strong>in</strong>terrupted work.<br />
• Cross-border self-employed work by carers and home helpers: As a consequence <strong>of</strong><br />
the freedom to provide services, self-employed workers and foreign companies may<br />
temporarily <strong>of</strong>fer their services <strong>in</strong> other EU countries. Neither the company nor the<br />
self-employed worker need work permits to do so. Many carers from the EU accession<br />
countries have set themselves up as self-employed workers <strong>in</strong> their home countries<br />
(<strong>in</strong>dependent entrepreneurs), so that they have health <strong>in</strong>surance and social security.<br />
<strong>The</strong> German family must conclude a service or work contract with the foreign worker.<br />
This means the relationship is not an “employer-employee relationship” but a “clientcontractor<br />
relationship”. In this case the carer must be able to provide evidence that<br />
he/she also works for other clients. Otherwise the employment relationship could be<br />
seen as a form <strong>of</strong> false self-employment.<br />
• Post<strong>in</strong>g <strong>of</strong> service company employees to jobs abroad: Foreign companies may<br />
temporarily <strong>of</strong>fer their services <strong>in</strong> other EU countries. It is legally possible to send care<br />
workers to temporary post<strong>in</strong>gs <strong>in</strong> another country. Once aga<strong>in</strong> <strong>in</strong> this case, the staff <strong>of</strong><br />
the company does not need work permits. A so-called post<strong>in</strong>g or assignment <strong>of</strong> workers<br />
abroad can be deemed to take place if workers are employed by a company (e.g. a<br />
caregiver service) <strong>in</strong> Central or Eastern Europe (and pay taxes and social security<br />
contributions there), if the post<strong>in</strong>g is temporary (up to twelve months), and if the<br />
services provided <strong>in</strong> <strong>Germany</strong> are be<strong>in</strong>g rendered on behalf <strong>of</strong> the employer. <strong>The</strong>se cases<br />
also require the conclusion <strong>of</strong> a service or work contract between the German family<br />
and the company. <strong>The</strong> client is therefore not the employer <strong>of</strong> the carer, but <strong>in</strong>stead pays<br />
the company which <strong>in</strong> turn pays its employees a normal wage. <strong>The</strong> workers are covered<br />
by German work-protection regulations. Wages paid are not subject to m<strong>in</strong>imum<br />
restrictions as long as there is no pay floor <strong>in</strong> the sector concerned. With the<br />
<strong>in</strong>troduction <strong>of</strong> a m<strong>in</strong>imum wage requirement <strong>in</strong> the care sector via the <strong>in</strong>clusion <strong>of</strong> this<br />
type <strong>of</strong> activity <strong>in</strong> the Employee Post<strong>in</strong>g Act, classification <strong>of</strong> the work – i.e. as qualified<br />
care giver or not – is therefore the criterion for decid<strong>in</strong>g whether the provisions <strong>of</strong> the<br />
Act are to apply and entitlement to payment <strong>of</strong> the m<strong>in</strong>imum wage exists.<br />
41<br />
This section is largely taken from Neuhaus et al. 2009:28ff and has been slightly edited and shortened by the<br />
author. For a more <strong>in</strong>-depth treatment, see also ver.di 2010a.
20<br />
• Referral <strong>of</strong> home service employees by an agency: Meanwhile some German companies<br />
serve as agencies for options 2 or 3 and organise their services so as to cover the<br />
various facets <strong>of</strong> hir<strong>in</strong>g and contract<strong>in</strong>g. In addition to referral services, they <strong>of</strong>ten <strong>of</strong>fer<br />
complete organisation <strong>of</strong> the cross-border activity. <strong>The</strong>ir services are governed by a<br />
special contract that <strong>in</strong>cludes a consultancy fee as (<strong>in</strong> most cases) an additional<br />
expense.<br />
This list illustrates the <strong>in</strong>teraction between national provisions and procedures and rules<br />
<strong>of</strong> Community law as they affect the complex body <strong>of</strong> regulations <strong>in</strong>volv<strong>in</strong>g freedom <strong>of</strong><br />
movement, freedom to provide services, post<strong>in</strong>g <strong>of</strong> workers and provision <strong>of</strong> temporary<br />
workers for this sector. <strong>The</strong> last years have witnessed numerous EU-level political<br />
<strong>in</strong>itiatives and amendments <strong>in</strong> Community law (e.g. a Directive on temporary agency work<br />
<strong>in</strong> 2008, 2008/104/EC) as well as ongo<strong>in</strong>g lively and controversial debate <strong>in</strong> response to<br />
judgments <strong>of</strong> the European Court <strong>of</strong> Justice <strong>in</strong> cases <strong>in</strong>volv<strong>in</strong>g the post<strong>in</strong>g <strong>of</strong> workers<br />
abroad (Vik<strong>in</strong>g, Laval, Rüffert, Luxemburg vs. Commission).<br />
“Foreign companies may<br />
temporarily <strong>of</strong>fer their services<br />
<strong>in</strong> other EU countries.<br />
It is legally possible to send<br />
care workers to temporary<br />
post<strong>in</strong>gs <strong>in</strong> another country.<br />
Once aga<strong>in</strong> <strong>in</strong> this case,<br />
the staff <strong>of</strong> the company does<br />
not need work permits.”<br />
<strong>The</strong>re are cooperation structures between referral agencies and personnel agencies <strong>in</strong><br />
the home countries <strong>of</strong> the workers that refer self-employed service workers, as well as<br />
cooperation either directly with the self-employed workers themselves or with foreign<br />
caregiver services who temporarily post their staff <strong>in</strong> <strong>Germany</strong>. <strong>The</strong>re have also been<br />
companies founded abroad with foreign partners (personnel referral agencies or<br />
caregiver services) <strong>in</strong> order to ensure correct implementation and referral. (Neuhaus et<br />
al. 2009: 79ff)<br />
© ISCOS
21<br />
“Pay for home helpers<br />
and carers from Central<br />
or Eastern Europe generally<br />
does not correspond to<br />
“normal wage levels;<br />
the services provided and<br />
the work<strong>in</strong>g <strong>times</strong> are<br />
some<strong>times</strong> difficult<br />
to reconcile with regular<br />
breaks and rest <strong>times</strong>”.”<br />
Challenges fac<strong>in</strong>g social partners,<br />
service providers and law-makers<br />
• Although atypical employment relationships may <strong>in</strong>deed <strong>of</strong>fer additional employment<br />
chances, particularly <strong>in</strong> the services sector and for low-skilled workers, they generally<br />
fail to meet applicable standards set by collective agreements, <strong>in</strong>dividual companies<br />
or entire sectors with regard to work<strong>in</strong>g hours, pay and work security. Eichhorst et al.<br />
(2010:6) are therefore right <strong>in</strong> suggest<strong>in</strong>g that the re-regulation <strong>of</strong> atypical forms <strong>of</strong><br />
employment should be carefully considered, even though op<strong>in</strong>ions on the concrete<br />
word<strong>in</strong>g <strong>of</strong> the regulations may differ depend<strong>in</strong>g on perspectives – employment policy<br />
vs. socio-political orientation – and stakeholders.<br />
• Pay for home helpers and carers from Central or Eastern Europe generally does not<br />
correspond to “normal wage levels; the services provided and the work<strong>in</strong>g <strong>times</strong> are<br />
some<strong>times</strong> difficult to reconcile with regular breaks and rest <strong>times</strong>” (Neuhaus et al.<br />
2009:14). <strong>The</strong>se authors are also quite right when they conclude that “a further<br />
important socio-political component is the issue <strong>of</strong> regulat<strong>in</strong>g employment<br />
circumstances and secur<strong>in</strong>g the rights” (Neuhaus et al. 2009:14) <strong>of</strong> employees.<br />
• A start<strong>in</strong>g po<strong>in</strong>t for political action is therefore also the need to change the f<strong>in</strong>ancial<br />
framework conditions <strong>of</strong> private households with<strong>in</strong> the scope <strong>of</strong> the nurs<strong>in</strong>g and longterm<br />
care <strong>in</strong>surance scheme and <strong>in</strong> the tax system, as these are the circumstances<br />
that affect decisions <strong>in</strong> favour <strong>of</strong> low-cost irregular foreign workers.<br />
• In the context <strong>of</strong> complete free movement <strong>of</strong> workers start<strong>in</strong>g <strong>in</strong> 2011:<br />
1) Clarification <strong>of</strong> permissible options under work and residency laws for the<br />
employment <strong>of</strong> citizens <strong>of</strong> the ten Central and Eastern European Member States <strong>of</strong> the<br />
EU that would satisfy the provisions <strong>of</strong> European law;<br />
2) Easily accessible and understandable <strong>in</strong>formation that is legally b<strong>in</strong>d<strong>in</strong>g.<br />
Together, these two improvements would help private households/persons want<strong>in</strong>g to<br />
legally employ home helpers and carers under fair work<strong>in</strong>g conditions and provide<br />
certa<strong>in</strong>ty, above all for the workers themselves. <strong>The</strong>y would also constitute an<br />
important prerequisite for decent, fair, equal and non-discrim<strong>in</strong>atory work<strong>in</strong>g<br />
conditions. In Austria, <strong>in</strong>clud<strong>in</strong>g personal care as an unrestricted trade <strong>in</strong> the Home<br />
Care Act has brought legal certa<strong>in</strong>ty and immunity from prosecution for families<br />
seek<strong>in</strong>g help and for workers alike. <strong>The</strong> Act gives carers rights and employee status<br />
and makes it easier for them to demand work standards and improvements guaranteed<br />
under <strong>labour</strong> law (like time <strong>of</strong>f); it also facilitates trade union organisation and<br />
representation (for more details on these po<strong>in</strong>ts and on trade union <strong>in</strong>volvement, cf.<br />
ver.di 2010a)<br />
• Look<strong>in</strong>g at the work <strong>of</strong> foreign home helpers and carers <strong>in</strong> home care situations, we<br />
see absolutely clearly that <strong>in</strong> the <strong>in</strong>terest <strong>of</strong> legal certa<strong>in</strong>ty as well as to guarantee<br />
decent work<strong>in</strong>g conditions and to strengthen the role <strong>of</strong> the social partners and the<br />
relevance <strong>of</strong> collectively agreed agreements there are still several issues <strong>in</strong> need <strong>of</strong><br />
immediate clarification. <strong>The</strong>re may also be a need to amend laws and procedures. And<br />
here aga<strong>in</strong> there is a lack <strong>of</strong> comprehensive, easily accessible, understandable<br />
<strong>in</strong>formation available from a s<strong>in</strong>gle central source.
22<br />
• No social contributions are made for persons <strong>in</strong> irregular employment, and these<br />
carers work without contractual security or guarantees under <strong>labour</strong> law (work<strong>in</strong>g<br />
hours, time <strong>of</strong>f, leave, social contacts, <strong>in</strong>formation etc.). This prevents fair competition<br />
among providers, as competition under the conditions sketched out above does not<br />
take place <strong>in</strong> an environment based on compliance with legal provisions and<br />
collectively agreed standards on service quality. Failure to pay taxes or social <strong>in</strong>surance<br />
contributions and non-compliance with the provisions <strong>of</strong> <strong>labour</strong> law – <strong>in</strong> addition to<br />
low pay – destroys the competitiveness <strong>of</strong> service providers operat<strong>in</strong>g legally <strong>in</strong> the<br />
domestic <strong>market</strong>” (Neuhaus et al. 2009: 91). Moreover, pr<strong>of</strong>essional providers are<br />
subject to quality standards and measures <strong>of</strong> quality control.<br />
“Failure to pay taxes or social<br />
<strong>in</strong>surance contributions and<br />
non-compliance with the<br />
provisions <strong>of</strong> <strong>labour</strong> law –<br />
<strong>in</strong> addition to low pay – destroys<br />
the competitiveness <strong>of</strong> service<br />
providers operat<strong>in</strong>g legally <strong>in</strong><br />
the domestic <strong>market</strong>”<br />
• Furthermore, the national and regional federations <strong>of</strong> non-pr<strong>of</strong>it service providers <strong>of</strong><br />
care services view the removal <strong>of</strong> potential carers from their home countries (“bra<strong>in</strong><br />
dra<strong>in</strong>”) critically and are concerned about these persons' private situations (e.g. <strong>in</strong><br />
families with dependent children or elderly parents).<br />
• M<strong>in</strong>imum wage <strong>in</strong> the care sector: Non-pr<strong>of</strong>it service providers <strong>of</strong> care services and<br />
some German states [Länder] see the risk that a pay floor may become a guidel<strong>in</strong>e for<br />
reimbursement <strong>of</strong> costs by health <strong>in</strong>surance companies and the long-term care<br />
<strong>in</strong>surance system. Despite the fact that the provisions to ref<strong>in</strong>ance carers via the<br />
Employee Post<strong>in</strong>g Act [Arbeitnehmerentsendegesetz, AEntG] are not affected <strong>in</strong><br />
pr<strong>in</strong>ciple, th<strong>in</strong>gs could be quite different <strong>in</strong> actual practice. Together with the<br />
Confederation <strong>of</strong> German Trade Unions and ver.di, they call for pay reflect<strong>in</strong>g the actual<br />
range and performance <strong>of</strong> services delivered; this not only guarantees the quality <strong>of</strong><br />
the caregiv<strong>in</strong>g tasks but also gives social recognition to work with the elderly and the<br />
sick.<br />
© ISCOS
23<br />
About the project<br />
This case study was written <strong>in</strong> the<br />
frame <strong>of</strong> the “Decent Work for All: A<br />
Key for Effective Industrial Relations”,<br />
a one-year project which aims to<br />
produce recommendations on how to<br />
improve work<strong>in</strong>g conditions around<br />
Europe <strong>in</strong> sectors with higher<br />
<strong>in</strong>cidences <strong>of</strong> precarious work<strong>in</strong>g<br />
conditions (ie construction, health and<br />
long-term care) and more vulnerable<br />
groups (ie youth, undocumented<br />
migrants) through coord<strong>in</strong>ated efforts<br />
by governments, employers and trade<br />
unions <strong>in</strong> the framework <strong>of</strong> social<br />
dialogue. It also looks <strong>in</strong>to the role <strong>of</strong><br />
social partners <strong>in</strong> fight<strong>in</strong>g precarious<br />
<strong>labour</strong> and promot<strong>in</strong>g decent work<br />
and quality jobs.<br />
This brief<strong>in</strong>g, coord<strong>in</strong>ated by SOLIDAR,<br />
was produced by Hans-Böckler-<br />
Stiftung <strong>in</strong> <strong>Germany</strong>. www.boeckler.de<br />
All “Decent Work for All: A Key for<br />
Effective Industrial Relations” brief<strong>in</strong>gs<br />
are materials on www.solidar.org<br />
SOLIDAR is a European network <strong>of</strong> 52<br />
NGOs active <strong>in</strong> over 90 countries<br />
work<strong>in</strong>g to advance social justice <strong>in</strong><br />
Europe and worldwide. SOLIDAR<br />
lobbies the EU and <strong>in</strong>ternational<br />
<strong>in</strong>stitutions <strong>in</strong> three primary areas:<br />
social affairs (more social Europe),<br />
<strong>in</strong>ternational cooperation (develop -<br />
ment cooperation) and education<br />
(lifelong learn<strong>in</strong>g for all).<br />
Authors:<br />
Claudia Bogedan, Birgit Kraemer<br />
and Mathias Maucher<br />
Responsible editor: Conny Reuter<br />
Sub-editor: Sarah Hammerton<br />
Translation (Part 2): Nicole Gentz<br />
Project Coord<strong>in</strong>ators:<br />
Mauro Striano and Mathias Maucher<br />
Publication Coord<strong>in</strong>ator:<br />
Abigail Goundry<br />
Pr<strong>in</strong>ted on recycled paper<br />
©SOLIDAR<br />
July 2010<br />
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This publication has been produced with the<br />
assistance <strong>of</strong> the European Union. <strong>The</strong> content<br />
<strong>of</strong> this publication is the sole responsibility <strong>of</strong><br />
SOLIDAR and can <strong>in</strong> no way be taken to reflect<br />
the views <strong>of</strong> the European Union.<br />
decent work<br />
decent life<br />
Supported by DG Employment<br />
and Social Affairs.