Now that increased pay rates have been negotiated for temporary workers in the metal and electrical industry, employers are expecting a rise in contracts of work and labour to avoid higher costs. These contracts outsource labour to industrial service providers or subcontractors who are known to pay staff lower salaries. 

“Temporary staffing will become considerably more expensive. Some [employers] will try to avoid this through using contracts of work and labour,” said president of the German association of employers (Gesamtmetall) in the metal and electrical industry, Martin Kannegiesser. Speaking in Berlin on Tuesday, he indicated that his association will initially not interfere with regulatory measures as the economic development for the next two years was extremely uncertain. Therefore, he said, the flexibility of businesses is key. Mr Kannegiesser also said that, in the future, businesses will have to adapt more to demographical change and increase productivity with fewer staff whilst still maintaining the same performance rate.

This news comes after the major trade union IG Metall, which represents workers in the metal and electrical industry, has negotiated a surcharge on top of the base rate for around 240,000 temporary employees in the sector in late May.

The association of temporary employment agencies (iGZ and BAP) already warned last month that temporary employment will become more expensive for employers and also decrease job opportunities for low-skilled workers.

Under the new collective agreement, temporary workers will see a surcharge of 15% after working in one company for six weeks. This will continuously rise, eventually reaching 50% after a nine-month period of employment in one company. Temporary workers who are employed in a business for more than two years are also entitled to be taken over as permanent staff.

Although the pay gap between temporary and permanent employees will decrease, the union also expects more and more employers to use contracts of work and labour to evade higher costs for temporary staff.