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Germany — Merkel wants to close loop-holes in German labour law

22 March 2010

Federal Chancellor (Prime Minister) Angela Merkel has criticised the practice of employing staff via in-house temporary employment agencies in order to reduce their salaries considerably as "bordering on immoral", Die Zeit reports.

The Chancellor said on Saturday that she would not just sit there passively "when companies like drugstore chain Schlecker simply sack their staff and re-employ them at half the pay via staffing agencies."


Merkel's Minister for Employment, Ursula von der Leyen, told German weekly Der Spiegel, "if the [temporary employment] sector cannot find the courage to sort this out by themselves we are going to intervene. And I am not talking about months here, I am talking weeks."

A spokeswoman for the Employment ministry said that a specialist committee, which includes union representatives, is currently working on proposals for how to avoid so-called 'Schlecker Practices' in future. Schlecker is not the only German company, which employs temporary staff via in-house or 'closely related' staffing agencies.

The loophole arises because Germany does not have a minimum salary as such. Minimum salaries are negotiated by industry sector via collective bargaining between employer organisations and unions. Temporary employment is its own sector and is represented by three different employers' organisations and several unions, which have in the past not collaborated.

However, due to the immense political and public pressure the sector is currently under, all three temporary employers' organisations have recently signed minimum salary agreements with the unions. The in-house temporary staffing agency practices are therefore expected to be equally resolved via self-regulation within the sector.

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