Florian Moritz - Economic, Finance and Fiscal Policy Department - German Confederation of Trade Unions Economic and wage development in Germany in a European.

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Presentation transcript:

Florian Moritz - Economic, Finance and Fiscal Policy Department - German Confederation of Trade Unions Economic and wage development in Germany in a European context Prague,

German Confederation of Trade Unions As the trade union umbrella organisation, the DGB represents the German trade union movement in dealing with the government authorities, the political parties, employers´ organisations and other groups within society. The DGB coordinates joint demands and campaigns for its 8 member unions. The DGB itself is not directly involved in collective bargaining and cannot conclude pay agreements. This is done by the member unions. Academic Experts on wage development and collective bargaining issues: Institute of Economic and Social Research (WSI) within the Hans-Böckler-Foundation.

As the trade union umbrella organisation, the DGB represents the German trade union movement in dealing with the government authorities, the political parties, employers´ organisations and other groups within society. The DGB coordinates joint demands and campaigns for its 8 member unions. The DGB itself is not directly involved in collective bargaining and cannot conclude pay agreements. This is done by the member unions. Academic Experts on wage development and collective bargaining issues: Institute of Economic and Social Research (WSI) within the Hans-Böckler-Foundation. htm German Confederation of Trade Unions

Wage development in Germany: Good in recent years…

Wage development in Germany: …good settlements in 2015, and…

Wage development in Germany: …statutory minimum wage (8,50€)… Gross hourly wage growth (against previous year in %): -> 3rd quarter > 3rd quarter 2015

Wage development in Germany: …statutory minimum wage (8,50€)…

Wage development in Germany: …but: catching up necessary… Wage share falling:

Wage development in Germany: …but: catching up necessary… A European problem:

Wage development in Germany: …but: catching up necessary… East is still lagging behind (Gap in wage level): All wages Agreed pay (collective agreements) Source: Hans-Böckler-Foundation

Main drivers: 1. Problems installing West-German System of Industrial Relations in East-German economy (after wrong economic policy decisions) 2. Unemployment & Change of employer strategies : refusal to negotiate in many industries, companies left employers organizations; outsourcing -> low wage sector 3. Product market deregulation / Privatization 4. Labour market deregulation: temporary work, Minijobs…, also reduction in unemployment benefits… Wage development in Germany: Reasons for long time stagnating wages

Collective Bargaining Coverage (in % of all employees):

Wage development in Germany: Reasons for long time stagnating wages Labour Market Reforms boosting atypical jobs (in Mill.):

Wage development in Germany: Reasons for long time stagnating wages Labour Market Reforms boosting low wage sector :

Wage development in Germany: Reasons for long time stagnating wages Labour Market Reforms boosting low wage sector:

Wage development in Germany: Reasons for long time stagnating wages In some Areas wage dumping:

Wage development in Germany: Reasons for long time stagnating wages In some Areas wage dumping (Meat industry etc.): -> Most of the work is done by subcontractors (also foreign) -> Especially posted workers from middle and eastern europe -> Until 2014: hourly wages as low as 5€ or less common -> Sometimes illegal practices -> Not enough controls -> difficulties in prosecution

Wage development in Germany: Economic effects and problems

Conclusions Germany needs more regulation on the labour market Minimum wage is important step to be improved, others (temporary work, contract work, Minijobs…) must follow We need a strenghtening of collective bargainig systems (for example: erga omnes / collective agreements) Prevent dumping! Country of origin principle in European Services Market must be prevented (no introduction of “services passport”…), easier prosecution of illegal practices… Higher wages in Germany lead to higher demand and stable growth Important also for other exporting countries in the Euro area.

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