Daily News

View All News

Germany – Businesses and the staffing industry fear increased regulation on use of temporary workers

26 March 2015

Proposed changes to rules governing the use of temporary workers in Germany could actually make employment more precarious, whilst robbing businesses of flexibility, according to a report seen by German newspaper Handelsblatt.

The business community has been up in arms ever since the ruling centre-right Christian Democrats and centre-left Social Democrats included plans to limit the use of temporary workers in their coalition agreement.

While the agreement calls for temporary workers to earn the same pay as full-time employees after working for nine months, the plan also limits the maximum duration of temporary employment to 18 months.

The Confederation of German Employers’ Associations (BDA) has warned that new rules on temporary employment could strangle what is a “key industry for growth and employment”. Labour unions have retorted the limits are a matter of fairness and avoiding the exploitation of temporary labour.

Holger Schäfer, author of a study obtained by Handelsblatt from the employer-friendly Cologne Institute for Economic Research (IW), wrote: “Temporary work is being threatened by a legally imposed reduction without being given the chance to further develop.”

The study, which surveyed HR managers and managing directors of about 400 companies, found that the changes will likely lead to a higher turnover among temporary workers and be detrimental to both labourers and the companies hiring them.

Nearly half (47.8%) of respondents said they would seek a new temporary worker for low-skill jobs after nine months to avoid paying the increase in wages. Thus, low-skilled workers, who make up about half of Germany’s 800,000 temporary workers, would be unlikely to benefit from equal pay.

The shorter amount of time working for a company would also lower the chances of proving their value to the business and potentially prevent them from earning qualifications.

Only one-in-three respondents to the study said they would consider retaining a temporary, low-skilled worker after nine months despite having to pay them more. For skilled workers, however, that percentage increases to 45.9%.

The report also noted that by limiting the maximum period to 18 months, the government makes it impossible for the temporary agency sector to concentrate more strongly on the placement of skilled workers and highly qualified personnel. Complex assignments typically demand a longer period of familiarisation.

This reason was cited by 41.7% of the respondents when asked if they would consider hiring a skilled employee full time after 18 months. Yet even in those cases, considerably more (62.2%) would opt to take on a new temporary worker after the time period elapsed.

Labour Minister Andrea Nahles, a member of the Social Democrats, still remains tight-lipped on the specifics of the new regulations. It remains an open question, for example, whether the maximum temporary work period refers to a specific individual, or whether a company can no longer employ any temporary worker for a specific job once that period has expired.

The subject will be discussed in the cabinet sometime in May or June, according to the ministry’s project planning, and then work will begin on drafting legislation.