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Germany – Temporary workers “underpaid”

17 June 2013

The strength of the German economy has been built on strong exports and the backs of “poorly paid” temporary workers, according to Frank-Jürgen Weise, head of the German Federal Employment Agency (BA). He made the claims despite recent collective agreements raising wages in the staffing sector.

The President of the Peterson Institute for International Economics, Adam Posen, agrees saying that “cheap labour is the main reason for the German export success of the past twelve years.” Writing for the German newspaper Die Welt, Mr Posen claims that temporary employees do not enjoy the protection and benefits that previous generations took for granted. 

The German unemployment rate has fallen from 11% to 6% in the past decade. Considering the economic crises of the past decade that feat has been described as “miraculous”. The primary reason for this decline was the proliferation of temporary agency employment. However, in order to boost exports, wages have remained low. Only last year did wages increase above the rate of inflation. 

Comparing the German temporary employment sector to that of the UK, Mr Weise said that the German staffing market would be much larger. “We would have two million temporary agency workers instead of 800,000. If we had more than one million agency workers, this would signal the need for structural changes to our job system.”

Mr Weise advocates better job stability by transitioning temporary workers into permanent jobs. “Many people have jobs that are atypical, risky, short-term, and low-paid. Too often we have ten temporary workers in place of two permanent employees. Economically, the latter would be better.”

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