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Germany – Investigation uncovers contractors’ wage dumping

08 August 2012

An undercover investigation broadcasted in the German media this week revealed that some contracts workers at the well-known supermarket chain REWE were paid under €6 per hour, which is below the minimum wage for temporary workers. Unions now say that contract workers will bear the brunt because of rising costs in the temporary staffing industry.

The German TV programme WISO aired the findings this week and the United Services Union (ver.di) was quick to condemn practices of underpaying contract workers.

“As absurd as it may sound, temporary staffing has simply become too expensive,” union representative Gerd Denzel said. “The advantage of contract work is that it makes previous temporary employment cheaper by 15% to 20%.”

This has led to rising concern that contract work may be misused as sham contracts. Normally, contract workers should only take instructions from their employment provider and not from the company they are outsourced to. However, the investigation showed that the undercover journalists posing as contract workers were given instructions by their REWE co-workers.

“This suggests that this is about a deliberate sham contract arrangement. It is only about reducing pay,” said professor Franz-Josef Düwell, a former Judge at the Federal Labour Court.

Following the broadcast, REWE has denied making use of deliberate sham contracts.

Trade union IG Metall warned last month that major collective agreements in the temporary staffing industry, which increase pay rates for temporary workers, will lead to a rise in “cheap” contract work. It argued that contract work is strategically used to avert rights of co determination and bargaining agreements. 

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