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In a recent survey by the Association of German Chambers of Industry and Commerce (DIHK), companies were asked what they thought would be the consequences of stricter legal regulations on temporary work for the economy. The answer was overwhelmingly clear – additional regulations would put important employment opportunities at risk.
These regulations are currently being discussed by Angela Merkel’s CDU government and their prospective coalition partner, the SPD.
The German temporary staffing industry is an important ‘flexibility’ valve, according to the report by DIHK. Four out of ten industrial companies consider temporary work to be of ‘high’ or ‘very high’ importance for operational flexibility. Since the start of the financial crisis, job planning has been short term and more staggered.
It is believed that the introduction of additional legal regulations would worsen the employment outlook in two ways. On one hand, there is the threat of relocating production abroad, and on the other hand there would be fewer new temporary workers for companies to hire.
According to the Federal Employment Agency (BAP): “About two-thirds of temporary workers were unemployed prior to finding temporary work. Almost every third temporary worker has not completed any form of vocational training.”
In macroeconomic terms, according to the report, the proportion of unskilled workers in the labour market is 13%. These people would face a difficult future if additional regulation were introduced.
The introduction of time limits to temporary contracts has been called counter-productive by DIHK. As a result, companies would be forced to train new workers more often. In addition, workers would be financially worse off as they would be ineligible for future industry surcharges. Any possibility of a permanent position with the client company would become more remote.