Anyone who wants to get government contracts from the federal government should have to adhere to collective agreements in the future. This is what a new draft law by Labor Minister Hubertus Heil (SPD) on “collective bargaining loyalty” provides. The federal government wants to use its power as a billionaire customer to influence working conditions. This is likely to have an impact on many employees. The most important aspects at a glance.
How can employees benefit from a collective bargaining agreement?
The main beneficiaries of such a regulation would be employees in companies who do not adhere to a collective agreement and therefore usually pay lower wages or have less favorable holiday regulations than competitors who are bound by the collective agreement. So far, the federal government can also order goods or services from these, often cheaper, companies. With the new law, this would only be possible if the company and possible subcontractors adhere to collective bargaining rules, such as specifications on wages, paid annual leave or maximum working hours.
What are the orders?
The law should only cover federal orders for more than 10,000 euros, for example when the federal police order protective vests for their officers. According to the latest procurement statistics from the Federal Ministry of Economics, the federal government purchased products and services worth almost ten billion euros in the first half of 2021 alone. The state spent most of its money on services, for example for the planning or maintenance of IT in public authorities, followed by construction contracts. This applies to all three levels of government, i.e. federal, state and local government. The report does not contain a more detailed breakdown for the federal government. The granting of concessions should also be linked to adherence to collective bargaining agreements, for example if a company operates a canteen on behalf of the public.
Will all companies commissioned by the federal government soon have to adhere to collective agreements?
No, it won’t be that quick. According to the law, Hubertus Heil and his ministry cannot simply dictate which company must now adhere to which collective agreement. To do this, a trade union or an employers’ association must first submit an application. This must be checked, among other things, whether the collective agreement mentioned in the application is “representative”, i.e. the relevant one for an industry. According to the plans, only then can the Ministry of Labor prescribe binding working conditions.
How should breaches of tariff compliance be punished?
There should be random checks to see whether a company actually keeps its “promise of loyalty to the collective bargaining agreement,” as the lawyers call it. The commissioned companies and possible subcontractors must be able to document their compliance with the law. Anyone caught violating the law should have to pay a contractual penalty. In addition, the draft law provides for a right to “extraordinary termination without notice” of the contract.
What do the unions say about the plans?
The German Trade Union Confederation (DGB) welcomes the federal government’s plans “in principle,” as it said on Tuesday. The bill goes in the right direction. For years, the DGB has been campaigning for a law on collective bargaining loyalty at federal level, most recently DGB boss Yasmin Fahimi called for this on May 1st. The DGB announced that the trade unions would work to improve the draft law as the legislative process progressed. However, the DGB did not name any points of criticism.
How do company representatives react?
That depends who you ask. The Bavarian Business Association (VBW) rejected the plans on Tuesday. The expense for companies is increasing “to an unacceptable level,” criticized VBW CEO Bertram Brossardt. The state should not exclude companies from competition that did business within the framework of existing laws. The construction industry sees things differently. Felix Pakleppa, General Manager of the Central Association of the German Construction Industry (ZDB), said the Süddeutsche Zeitung, the planned regulations are “overall sensible” for the construction industry. It is difficult if the state shifts control obligations towards subcontractors to the main company. However, the draft law provides for an unbureaucratic implementation: companies could acquire a certificate to prove their adherence to the collective agreement and work with it nationwide. “This will bring us more fair competition,” said Pakleppa.
How do the federal states deal with their orders?
Differing. This is particularly important because the federal states spend even more money on orders than the federal government, worth a good 20 billion euros in the first half of 2021 alone. According to the federal government in April Berlin, Bremen, Thuringia, Saarland and Saxony-Anhalt have regulations that oblige contractors to adhere to collective bargaining agreements. In addition, several states prescribe a minimum wage, namely Berlin (13 euros), Brandenburg (13 euros), Bremen (12.29 euros) and Thuringia (12.07 euros). In Saxony-Anhalt, no one wants to set an hourly wage, the minimum wage there is linked to the public sector collective agreement.