The changing labour market in Germany in times of crisis - Solidar

The changing labour 

market in Germany 

in times of crisis 

DECENT WORK FOR ALL: 

A KEY FOR EFFECTIVE INDUSTRIAL RELATIONS 

BRIEFING ON THE SITUATION IN GERMANY 

19

01 

Part 1 

The changing labour market in Germany in times of 

crisis by Claudia Bodegan & Birgit Kraemer (HBS) * 

The German economy 

In Germany, Europe’s largest economy, about 68% of all employees worked in the 

services sector in 2007, which is slightly less than the average of the 15 EU Member 

States that constituted the EU before the enlargement of 1 May 2004 (EU15). Germany’s 

transformation to a service society has been marked by a growth in personal and 

business services and a decline in social (state) services. While services make up 70% 

of gross domestic product (GDP), manufacturing and construction have held their 

ground, accounting for 30% of GPD since the early 1990s. The automotive, machinery 

and chemicals sectors contribute to Germany’s leading role on the world export market. 

The dependency on exports however meant that the downturn in the German economy 

during the recession was more severe than the European average. While full-time work 

has been declining, Germany has the second highest level of part-time employment in 

the 27 EU Member States (EU27). 

In the past decade, pay trends for the employed workforce in Germany have been 

marked by wage restraint; developments have thus differed from main European trends 

in several respects: real earnings decreased by 1.5% over the period 2000–2008 

according to federal statistics, while they increased in most other European countries. 

In a ranking of European labour costs based on Eurostat data, Germany came eighth in 

terms of hourly labour costs in the private sector in 2007 and 2008, with € 28 per hour 

in Germany compared with an average of € 26 at EU level. Whereas labour costs in the 

German manufacturing sector were among the highest in the EU (fourth place), labour 

costs in private services matched the European average. 

In 2009, the gender pay gap was 23% which is one of the highest in Europe. According 

to Destatis, the Federal Statistical Office (Statistisches Bundesamt), gross hourly wages 

of female employees rose by 2.7% compared to the previous year up to € 14.90. For Men 

it rose by 2.6 % to € 19.40. Thus, the gender pay gap remained by 23% as in the previous 

years. 

In light of a growing number of low-wage earners, the lack of a statutory minimum 

wage has become a hotly debated issue in German politics. Instead, government makes 

use of the Posted Workers Act (Arbeitnehmer-Entsendegesetz) which allows the 

minimum standards on pay and working conditions of a sectoral collective agreement 

to be extended to the whole industry, covering all domestic and posted workers – 

namely, workers from another EU Member State sent temporarily by their employer to 

work in Germany. 

* 

This paper is a synopsis of research of the Institute of Economic and Social Research 

(Wirtschafts- und Sozialwissenschaftliches Institut/WSI) within the Hans-Böckler- 

Foundation (Hans-Böckler-Stiftung/HBS). Some parts of this paper are taken from the 

WSI’s contri bution to the EIRO’s homepage (www.eiro.eurofound.eu.int) prepared by 

Birgit Kraemer and Dr. Heiner Dribbusch. We would like to thank Thorsten Franz who 

helped to compile this report.

02 

Latest labour market developments 

In the aftermath of the financial crash in 2008 the German economy contracted severely: 

GDP declined by 6.7% between the beginning of 2008 and the first quarter of 2009. In the 

last quarter of 2008, gross national product dropped by 2.4% and in the first quarter 

of 2009 by 3.5% compared with the previous year, according to the Institute for 

Employment Research (Institut für Arbeitsmarkt- und Berufsforschung/IAB). The 

metalworking industry and the chemical industry were hit the hardest by the recession 

in 2008 and 2009, whereas health, social service and education were hardly affected in 

2008 and 2009. However, it is to be expected that public services and private personal 

services will in the long run have to bear the costs of crisis-related saving programmes. 

“The German labour market 

development since the 

beginning of the recession has 

been labelled a ‘job miracle’, 

since unemployment increased 

below EU-average.” 

The German labour market development since the beginning of the recession has been 

labelled a ‘job miracle’, since unemployment increased below EU-average. According 

to figures by Destatis the economically active population still increased by 1.4% in 2008 

and dropped by only 0.1% in 2009. Also in 2009, full-time employment subject to social 

security contribution decreased by only 1.1%, whereas part time work rose by 2.3%. The 

total number of unemployed persons increased by 4.7% from 2008 to 2009. The 

unemployment rate went up to 8.2% in May 2009, corresponding to an increase of 0.4 

percentage points compared with the previous year; in May 2009, the unemployment 

rate stood at 13.3% in East Germany and 6.9% in West Germany. Flexible working time 

arrangements and short-time work helped to prevent a more significant increase in 

unemployment in the wake of the sharp decline in demand. 

Maintaining employment during the crisis 1 

In order to handle the economic crisis following the financial crash in 2008, the federal 

government turned to employers’ associations and – for the first time in years – to the 

trade unions in planning for the economic stimulus packages and for other measures 

protecting employment. The two parties differed strongly on the need for state 

intervention on the extent of state regulation. 

In fall 2008, the Confederation of German Employers’ Associations (Bundesverband der 

Arbeitgeberverbände/BDA) considered reductions in taxes and non-wage labour costs 

as an “economic stimulus programme”. A more detailed statement was published in 

November 2008 by the Confederation of German Industry (Bundesverband der 

Deutschen Industrie/BDI) suggesting that the economic crisis was to be tackled by 

limiting non-wage labour costs, by financial institutes providing sufficient credit to the 

private economy and by carrying out planned public investments in schools. 

In contrast, trade unions published detailed plans for a stimulus package. In December 

2008, the Metalworkers’ Union “IG Metall” published a ‘7 point programme to stabilise 

employment’ which called for credits to enterprises, for the pro-active use of shorttime 

work, for a scrapping bonus to support the car-manufacturing industry and for the 

extension of codetermination rights. Relocation and plant closures should depend on a 

2/3 vote of the supervisory board. Works council members should have the right to veto 

relocations and closures, according to “IG Metall”. On 12 December 2008, the Confederation 

of German Trade Unions (Deutscher Gewerkschaftsbund/DGB) called for an economic 

1 

Dribbusch, Heiner (2009) Working time accounts and short-time work used to maintain employment, 

http://www.eurofound.europa.eu/eiro/2009/12/articles/de0912059i.htm.

03 

“... 51% of all establishments 

with a works council are 

affected by the crisis. The crisis 

affects in particular sectors like 

raw materials and investment 

goods.” 

and growth stimulus package of € 60 billion or 2.5% of gross domestic product (GDP) to 

generate about 710,000 new jobs in 2009 and up to 730,000 jobs in 2010. It also suggested 

additional public spending on education and the energetic refurbishment of buildings, 

an increase in the flat-rate benefit for the long-term unemployed (Arbeitslosengeld II) 

and so-called consumer cheques. 

The economic stimulus packages included various measures such as extensive credits to 

the private sector, financial means for the energetic refurbishment of buildings in support 

of the construction sector, a scrapping bonus in support of the automotive industry and 

the extension of the duration of short time work to 18 months and, in 2009, to 24 months. 

In November 2009, the Institute of Economic and Social Research (Wirtschafts- und 

Sozialwissenschaftliches Institut/WSI) within the Hans-Böckler-Foundation (Hans- 

Böckler-Stiftung/HBS) published new findings (in German) from a special WSI Works 

Council Survey on the effects of the economic crisis. The survey asked works councils 

whether the company was affected by the crisis and which measures had been taken to 

maintain employment and avoid forced dismissals 2 . Its results are representative for 

companies with 20 or more employees and a works council. The survey involved 2,324 

works councils and was conducted between July and September 2009. 

The results show that 51% of all establishments with a works council are affected by the 

crisis. The crisis affects in particular sectors like raw materials and investment goods. 

Whereas 78% of establishments in the raw materials and capital goods sector and 75% 

of those in the investment goods and durables sector took measures aimed at 

safeguarding employment, this was the case in only 18% of establishments in the 

financial services sector. However, only a minority of companies have massively laid off 

workers. The survey revealed that the two most widespread methods used to cut costs 

while maintaining employment levels have been working time accounts and short-time 

work. Nonetheless, job cuts have also occurred in various ways. 

Companies have used a wide variety of measures aiming to tackle the crisis by cutting 

labour costs while avoiding dismissals. The most widespread measure is the use of 

working time accounts to reduce effective working time. In total, 30% of companies made 

use of working time accounts either in the form of a reduction of hours saved in individual 

accounts or in the form of working time credits which will have to be worked in the future 

when business recovers. The second most widespread measure is the introduction of 

short-time work. Other measures include the internal posting of employees and 

adjusted schemes for paid leave, as well as cuts in pay and benefits (Table 1). 

Table 1: Use of various cost-cutting measures short of forced redundancies (% of all 

establishments) 

Measure 

% of establishments introducing 

cost-cutting measures 

Reduction or expansion of working time accounts 30 

Introduction of short-time work 20 

Internal posting 14 

New schemes for paid leave 13 

Cuts in pay 11 

Other changes in working time 8 

Cuts in benefits 5 

Note: Survey covered establishments with 20 and more employees and a works council; multiple answers were possible, 

Source: WSI-Betriebsrätebefragung 2009 

2 

Dribbusch, Heiner (2009) Working time accounts and short-time work used to maintain employment, 

http://www.eurofound.europa.eu/eiro/2009/12/articles/de0912059i.htm.

04 

Although the number of redundancies was much lower than expected by some 

observers, there have been job cuts (Table 2). 

Temporary agency workers were among the first to lose their jobs, but works councils 

also reported that in 28% of establishments job cuts affected the core workforce. In 14% 

of establishments, there were forced redundancies. 

In some cases, new instruments were developed to bridge the ongoing crisis. The Ruhr 

Employer Association and the North-Rhine Westphalia Metalworkers’ Union concluded a 

collective agreement that provides for a temporary staffing pool among manufacturers in 

the metal and electrical industry in the Ruhr region of North-Rhine Westphalia in Western 

Germany. Covering about 350 businesses and up to 70,000 workers, the Ruhr agreement 

is the largest of its kind in the country in terms of coverage rate. The agreement provides 

for the temporary assignment of blue-collar and white-collar workers – excluding trainees 

and teleworkers – to other establishments under the conditions of the employment 

contract of the sending establishment. It provides for temporary work as well as for a 

temporary transfer for training purposes. The works council is involved under the terms 

of the Works Constitution Act (Betriebsverfassungsgesetz/BetrVG). To date, IG Metall 

knows of 15 collective agreements on local staffing pools in North-Rhine Westphalia alone. 

“In some cases, new instruments 

were developed to bridge 

the ongoing crisis. The Ruhr 

Employer Association and the 

North-Rhine Westphalia 

Metalworkers’ Union concluded 

a collective agreement that 

provides for a temporary 

staffing pool among 

manufacturers in the metal 

and electrical industry in the 

Ruhr region of North-Rhine 

Westphalia in Western 

Germany.” 

The parties to collective bargaining emphasise that in their experience the creation of 

staffing pools depends on a strong networking structure and the existence of a 

representative on the employer side promoting and organising the staff transfer. In 

addition, the local trade union needs to be supportive, and inform and support the works 

councils. However, temporary staffing can be more costly to the employer than 

temporary agency work. The results of the Ruhr Agreement remain to be seen. 

Table 2: Use of cost-cutting measures involving job cuts (% of all establishments) 

Measure 

% of establishments introducing 

cost-cutting measures 

A reduction of the core workforce 28 

Reduction of temporary agency work 24 

Non-renewal of fixed-term contracts 17 

Paying compensation for voluntary redundancies 7 

Establishment of a so-called transfer agency 

(Transfergesellschaft) 

2 

Note: Survey covered establishments with 20 and more employees and a works council; multiple answers were possible, 

Source: WSI-Betriebsrätebefragung 2009

05 

“Various measures have been 

implemented during the last 

two decades in order to further 

flexibilise the labour market. 

Summing up, working time, 

social benefits, labour rights 

and employment protection 

were deregulated. As a 

consequence, wage inequalities 

as well as atypical employment 

increased.” 

Atypical employment 

In sum, the German labour market witnessed significant changes in the last decades. 

Especially atypical forms of employment have become prominent. On the one hand 

politics promoted these forms by deregulating. On the other hand employees and 

employers alike made use of the different forms of atypical forms of employment. 

Various measures have been implemented during the last two decades in order to further 

flexibilise the labour market. Summing up, working time, social benefits, labour rights 

and employment protection were deregulated. As a consequence, wage inequalities as 

well as atypical employment increased. 

However, the main problems in the labour market (e.g. long-term unemployment) were 

not resolved, either. Moreover, new problems arrived: the risk of poverty increased 3 , 

membership of social insurance schemes decreased, investments in (further) education 

and lifelong learning remained low 4 . With these developments the importance of 

‘standard full-time employment arrangements’, the “Normalarbeitsverhältnis”, as the 

regular form of employment for the majority of employees is diminishing, with knockon 

effects for social security, wages and working conditions 5 . 

Statistical analyses differentiate this picture: Job growth basically takes place in parttime 

and atypical employment. According to the Federal Statistical Office employment 

rates increased from 50.8% to 51.5% (between 1991 and 2006), whereas participation 

declined from 69.3% to 68.9%. Between 1991 and 2004, the participation rate of women 

rose by 2.2% (only in West Germany) (62.2%), while male participation declined by 4.1%. 

Almost half of the employed women work part-time (46%). In the period between 1995 

and 2006, the share of employees liable to social security contributions dropped from 

75% to 67.5% while between 1990 and 2004 full-time jobs declined by 19%. According to 

Federal Employment Agency (Bundesagentur für Arbeit) statistics, about 6.5 million 

people were employed as contingent workers (including persons holding other job 

contracts) in 2007, i.e. workers who work for an organisation on a non-permanent basis, 

usually working under contract for a fixed period or a specific project, also known as 

freelancers, independent professionals, temporary contract workers, independent 

contractors or consultants. Thus, non-standard forms of employment have gained in 

significance and have triggered controversial discussion. So far empirical research has 

been mainly concerned with the degree to which non-standard employment and normal 

employment differ with respect to their working conditions. Little attention has been 

given to the question of how the transition between different forms of employment 

works. Analyses show that transitions from non-standard to normal employment work 

only to a limited degree. People who were engaged in normal employment are more 

likely to find such employment again. Hence it seems to be justified, to a certain extent, 

to talk about some form of path dependency of employment. However the probability of 

individuals moving from a non-standard employment relationship to a normal 

employment relationship differs, depending on the specific form of employment 6 . 

Consequently, new social risks evolve through new transitions in lifestyle and new 

social policy instruments need to be developed 7 . 

3 

For statistical data and background information on the rising risk of poverty in Germany see on the Hans- 

Böckler-Foundation’s website (in German): http://www.boeckler-boxen.de/1116.htm. 

4 

Hartmut Seifert (2006) Was hat die Flexibilisierung des Arbeitsmarktes gebracht? WSI-Mitteilungen 11/2006. 

5 

Berndt Keller/Hartmut Seifert (Hg.) (2007) Atypische Beschäftigung – Flexibilisierung und soziale Risiken, 

Berlin: edition sigma. 

6 

Miriam Gensicke/Alexander Herzog-Stein/Hartmut Seifert/Nikolai Tschersich (2010) Employment: once nonstandard, 

always non-standard? Examining transitions between non-standard and normal forms of 

employment. WSI Mitteilungen 4/2010, S. 179-187. 

7 

Günther Schmid (2008) Entgrenzung der Erwerbsarbeit – Erweiterung der sozialen Sicherheit. WSI- 

Mitteilungen 07/2008, S. 358-364.

06 

Therefore, trade unions have put renewed emphasis on counselling atypical workers on 

job-related matters and insurance issues. The United Services Union (Vereinte 

Dienstleistungsgewerkschaft/ver.di) provides online-guidance to unemployed persons. 

The trade union has also set up a company providing services such as counselling for 

self-employed persons (including non-members); other counselling projects target 

atypical workers in the professional and adult education sector, the call centre industry, 

the retail and the media sector. Moreover, the trade union trains volunteers to be 

contacted locally for guidance on social insurance matters. Numerous activities address 

education (school level) and continued vocational training. Trade union membership 

fees typically include legal protection and additional provisions in some insurance 

schemes including the so-called Riester pension (private pension contributions eligible 

for government subsidies). Initiatives on the part of employers’ associations typically 

relate to the field of vocational training but more recently the issue of demographic 

change and the employment of elderly workers have been taken up. Employer 

associations and trade unions have to be consulted if a new profession is defined and if 

a new training scheme is integrated into the dual vocational training system. Mostly 

recently, a range of new professions have been defined to improve the employability of 

persons in low skilled jobs. As the fast food service industry (McDonalds, Burger King, 

etc.) provides for many low skilled and atypical jobs in the restaurant sector, the new 

profession is meant to improve the career chances of employees. 

“Mostly recently, a range of 

new professions have been 

defined to improve the 

employability of persons in 

low skilled jobs. As the fast 

food service industry 

(McDonalds, Burger King, etc.) 

provides for many low skilled 

and atypical jobs in the 

restaurant sector, the new 

profession is meant to improve 

the career chances of 

employees.” 

There is a strong gender dimension to the problem as labour market policies have 

increased the employment rate by promoting part-time work and mini-jobs for women 

and as collective bargaining is at its weakest in female dominated service sectors. 

Today, 46% of employed women work part-time while female total working hours have 

stayed the same as in 1990. Given wage rates in female professions, even standard parttime 

work does not pay enough to make a living nor does it provide for sufficient 

unemployment allowances and retirement pensions. Thus, women’s participation in the 

labour market, although increasing in numbers, remains precarious. A newly published 

book by the WSI investigates the situation of women at the company level. This stateof-the-art 

synopsis explores various gender equality policies and presents 

recommendations for action 8 . It shows that labour market segregation, gender wage 

gap, shorter working time and fewer career opportunities characterise women’s 

situation in the labour market. Moreover, gender equality activities at the enterprise 

level have been discussed extensively in Germany. Nevertheless, expertise on 

stimulating gender equality is still lacking in most companies. 

The extensive debate on non-standard employment in Germany focuses in particular on 

‘mini-jobs’ and temporary agency work 9 . The so called ‘mini-jobs’ (geringfügige 

Beschäftigung) are part-time jobs not paying more than € 400 a month, which is the 

threshold for social security contributions. This preferential treatment also applies to 

people who have (only) one minor job in addition to their main job. Employers, however, 

must pay a fixed percentage of the amount paid to the employee up to this threshold in 

taxes and contributions to pensions and healthcare insurance. The payment procedure 

for these employers’ contributions and flat-rate tax has been simplified in the last 

decade, and both of them now go to a single collection agency. Today the employer has 

to pay around 31% of the wage to this central agency. This encloses 15% of contributions 

to pension insurance and 13% to health insurance. In 2008 17.4% of total employments 

are ‘mini jobs’. More interestingly, 80% of the workers with mini-jobs are women 10 . 

8 

Projektgruppe GiB (2010): Geschlechterungleichheiten im Betrieb. Arbeit, Entlohnung und Gleichstellung 

in der Privatwirtschaft. Forschung aus der Hans-Böckler-Stiftung. Berlin: edition sigma. 

9 

Seifert, H./Brehmer, W. (2008) Leiharbeit: Funktionswandel einer flexiblen Beschäftigungsform, in: WSI 

Mitteilungen 6/2008, S. 335-341. 

10 

Heiner Dribbusch (2010) Germany: Flexible forms of work: 'very atypical' contractual arrangements, 

http://www.eurofound.europa.eu/ewco/studies/tn0812019s/de0812019q.htm.

07 

“Temporary agency work was 

promoted by the Hartz 

regulation in Germany and 

altered in character during the 

last years. It is no longer meant 

to cover certain production 

peaks but has developed as a 

regular form of employment at 

the company level.” 

Research shows that there is a strong link between ‘mini-jobs’ and low-pay. In general, 

‘mini-jobs’ are low-pay jobs. In sum, employment in the low-pay sector increased in 

Germany during the ‘boom’ in 2007. At the same time hourly gross wages decreased 11 . 

By the end of 2007 6,5 million people - which is every fifth employee works for wages 

below low pay threshold of € 9.62 in West Germany and € 7.18 in East Germany. Every 

third in the low pay sector has wages below € 6 per hour. Interestingly, more than half 

of the low pay employees have completed a formal vocational training. Here the lack of 

a statutory minimum wage in Germany is striking. 

Temporary agency work was promoted by the Hartz regulation – a legislative package 

dealing with labour market reform and a revision of unemployment benefits - in Germany 

and altered in character during the last years. It is no longer meant to cover certain 

production peaks but has developed as a regular form of employment at the company 

level. In Germany, two forms of temporary work exist: temporary agency work, which is 

regulated by the Temporary Employment Act (Arbeitnehmerüberlassungsgesetz/AÜG), 

and the temporary assignment of workers by one employer to another in the same craft 

or industry given that there exists an according collective agreement between the social 

partners. The latter type of temporary work is based on the assumption that 

establishments in the same sector of economic activity are affected in different ways by 

an economic downturn and where in one establishment layoffs may be considered, in 

another staff absence needs to be covered. The bargaining partners both promote 

collective agreements on temporary staffing pools at local or regional level as alternative 

measures to layoffs, short-time work and temporary agency work. However, whereas 

temporary agency work has been increasing during the recession, the implementation of 

the latter form of temporary work is still poor. 

The Hans-Böckler-Foundation provides further statistical data and background information 

on precarious work 12 (Graphs 1 and 2) as well as low pay and minimum wages in 

Germany in a special service called “Böckler Boxen” 13 (Graphs 3 and 4). Moreover every 

two weeks, the Hans Böckler Foundation's information service (Böckler Impuls) 

compiles concise analyses and reports on labour, economic and social issues written 

for people who are short of time. It evaluates scientific sources and sound opinions 14 . 

Graph 1: Reduced income – atypical employment 

Workers and 

employees... 

in regular employment * 

1992 

2005 

80,5% 

65,5% 

with atypical contracts 

1992 

2005 

19,5% 

34,5% 

In the group of 

those with atypical 

contracts... 

fixed-term contracts 

part-time work 

1992 

2005 

1992 

2005 

3,5% 

6,1% 

14,5% 

18,8% 

in limited part-time work 

1992 

2005 

2,3% 

7,9% 

in temporary agency work 

2001 ** 

2005 

1,7% 

3,7% 

* Full-time, no fixed-term employment, not in limited part-time employment, no temporary agency work 

** First year for which data are available. 

Source : Socio-economic Panel 2007 

SOURCE: HTTP://WWW.BOECKLER-BOXEN.DE/4792.HTM 

11 

Thorsten Kalina/ Claudia Weinkopf (2009) Niedriglohnbeschäftigung 2007 weiter gestiegen: zunehmende 

Bedeutung von Niedrigstlöhnen. Duisburg: Inst. Arbeit und Qualifikation. IAQ-Report, Nr. 2009-05. 

12 

See the Hans-Böckler-Foundation’s website: http://www.boeckler-boxen.de/1920.htm (in German). 

13 

See http://www.boeckler-boxen.de/2690.htm (in German). 

14 

See http://www.boeckler.de/32006.html.

08 

Graph 2: Atypical employment – high risk of precarious work 

Compared to workers and employees in full-time employment, the risk 

to have a low wage implying precarious labour is X-times as high for... 

women 

men 

with fixed-term contracts 3,4 x 2,6 x 

fixed part-time employee 1,9 x 4,5 x 

temporary agency workers 4,2 x 6,4 x 

to be unemployed after one year... 

women 

men 

with fixed-term contracts 3,4 x 3,1 x 

fixed part-time employee 0,9 x 0,9 x 

temporary agency workers 3,6 x 3,1 x 

Source : Bremer, Seifert 2009 


Graph 3: Low wages: Regular situation for those entering the labour market 

Low-wage earners aged 25 years 

and younger*... 

Low-wage earners with completed 

professional training... 

Men and women with fixed-term 

contract and low wage... 

Working time : men and women 

with a low wage 2007... 

1995 

30,7% 

46,9% 

58,5% 

43,2% 

29,3% 

25,4% 

22,3% 

47% 

1995 2007 

2007 

70,8% 

1995 2007 

Full-time 

mini-job / 

limited part-time 

employment 

Part-time 

* Threshold for low wage set at 67% of median income 

Source : Socio-economic Panel 2007; own calculations Institute for Work, Skills and Training (Institut Arbeit und Qualifikation). See: http://www.iaq.uni-due.de/en/index.php 


Graph 4: Wage earners in need of supplementary unemployment benefit payments 

Percentage of persons in receipt 

of unemployment benefit II (ALG II) 

having a job. 

26,5% 

Workers and employees in need of unemployment benefit II (ALG II), 

a flat-rate benefit for the long-term unemployed and persons under 

social assistance payments, in addition to income from waged work. 

Self-employed 

Employed 

102.439 

1.232.350 

Share of cross income charged 

against the amount of the 

unemployment benefit II (ALG II) 

when calculating the basic income 

support for those with income from 

waged work. 

28% 18,2% 

Source : Federal Employment Agency 2008 

Men 

Women 

Germans 

Non-Germans 

589.085 

718.219 

1.043.852 

258.975 

Below 

400 € 

400-800 € 

Above 

800 € 

53,8% 

SOURCE: HTTP://WWW.BOECKLER-BOXEN.DE/5600.HTM

09 

“The term flexicurity is in 

general used to describe the 

need to counterbalance an 

enhanced flexibility in the 

labour market with appropriate 

social security policies. At the 

moment, flexicurity is the single 

most popular concept for the 

reform of labour markets, 

labour laws and employment 

policies in the European Union 

(EU).” 

Flexicurity 

Flexicurity – a combination of flexibility and security – has in a remarkably short time 

become a political celebrity in its own right. The term flexicurity is in general used to 

describe the need to counterbalance an enhanced flexibility in the labour market with 

appropriate social security policies. At the moment, flexicurity is the single most popular 

concept for the reform of labour markets, labour laws and employment policies in the 

European Union (EU). The EU Commission defines flexicurity rather vaguely as an 

integrated strategy to enhance at the same time flexibility and security in the labour 

market. However, flexicurity is among one of the most popular “concepts” promoted 

by the European Commission. 

In its 2006 Green Paper on “Modernising labour law to meet the challenges of the 21st 

century”, the European Commission applied the concept of flexicurity to concrete policy. 

The Green Paper mainly promotes flexicurity policies relaxing employment protection 

legislation while providing advances in employment and social security for flexible 

workforces, like fixed-term, part-time and agency workers, or the self-employed. In 

Germany, it aims at deregulating a “rigid” labour market. Comparing empirical evidence 

from 27 EU countries based on data by the European Foundation shows that in the 

meantime flexibility is achieved at the expense of social security. What are therefore 

needed are concepts to compensate for the negative effects of flexibilisation 15 . As 

flexicurity is promoted by the European Commission, there is a risk that in Germany the 

term will be applied to measures which actually do not provide for security. 

Although there has been an ongoing debate on the normative concept of flexicurity and on 

measures of implementation at company level and at societal level – particularly on behalf 

of researchers and trade unions –, chances for implementation have been in decline. 

In Germany, the term ‘flexicurity’ is in fact rarely applied to public policy approaches. 

Thus, the views of the collective bargaining parties differ on what can be termed a 

flexicurity approach but both are substantially involved in its implementation (via works 

councils and companies, collective bargaining, representation in bodies of the dual 

vocational training and of unemployment, pension and health care insurance systems). 

The views of employer associations on particular aspects of public policies can differ. 

For example, the Confederation of German Employers Associations (Bundesverband 

deutscher Arbeitergeberverbände/BDA), considers that flexicurity is best assured by not 

adhering to old forms of job protection (contractual arrangements) but by improving the 

chances of individuals to find a new job quickly. The flexibility of companies as well as the 

mobility and flexibility of workers is to be increased. The BDA supports policies abolishing 

restrictions on the employment of temporary agency and fixed-term workers, with labour 

market policies providing for an increase in atypical jobs and with public measures 

subsidising the pay of newly employed job-seekers. Education and continuous vocational 

training is to be improved by close cooperation with employers. Further reforms are 

needed whereby individuals will have to take more responsibility in job seeking, in 

training and in contributing to insurance schemes. The BDA highlights contractual 

arrangements, lifelong learning and labour market policies as some of the main issues. 

The views of the trade unions differ on details. The Confederation of German Trade 

Unions (Deutscher Gewerkschaftsbund/DGB) claims that combining flexibility and 

security implies that new concepts of regulation are to be developed by public 

authorities and collective bargaining parties. With regard to standard employment, jobs 

of good quality and internal job stability are to be taken as the guideline and new 

measures are needed to support atypical workers, such as: the right to permanent 

15 

Hartmut Seifert/Andranik Tangian (2008): Flexicurity – Gibt es ein Gleichgewicht zwischen Arbeitsmarktflexibilität 

und sozialer Sicherheit? WSI-Mitteilungen 11+12/2008, S. 627-635.

10 

employment after a certain number of fixed term contracts; a statutory minimum wage 

and extension of the Posted Workers Act to the temporary agency sector. Labour market 

policies increasing temporary agency work, ‘mini-jobs’ and other forms of atypical 

employment should stop, in order to prevent a further substitution of permanent jobs 

and further growth of the low-wage sector. High quality of education and of the dual 

vocational training system, continuous training and adult education is needed to support 

the individual in coping with economic and societal changes. The flat-rate benefit for the 

long-term unemployed (Arbeitslosengeld II) should be increased; pension schemes 

based on the contributions of employees and employers are to be reformed to include 

all people in employment and to provide special support for those in need. 

Public policy measures on flexicurity, such as the normalisation of part-time and fixedterm 

work, were more pronounced in the 1990s and at the beginning of the decade, 

whereas increasing flexibility has been high on the political agenda for the last few 

years. Collective bargaining is often said to play a substantial role in providing for 

flexicurity measures at company level and well known examples are cited as proof, such 

as job placement provisions or working time accounts. However, to achieve these 

bargaining results substantial efforts including industrial action were needed. They are 

rare in the private service sector and implementation in small and medium enterprises 

(SMEs) is often poor. The number of employers’ associations willing to deal with 

flexicurity issues is rather limited. Additionally, the number of workers covered by 

collective agreements is decreasing as companies quit their membership. 

“... The aim to counterbalance 

flexibility in the labour market 

with appropriate social security 

measures and moreover 

allowing the working population 

to take advantages of an 

increased flexibility has been 

the guiding idea of different 

works that have been on the 

research agenda at the WSI 

over the last decade.” 

Nevertheless, the aim to counterbalance flexibility in the labour market with appropriate 

social security measures and moreover allowing the working population to take 

advantages of an increased flexibility has been the guiding idea of different works that 

have been on the research agenda at the WSI over the last decade. For example, Heide 

Pfarr developed a flexicurity concept for Germany to be implemented in labour law 16 . 

She analyses changes in labour law in the last two decades and identifies the 

possibilities for improving social security in a flexible labour market. As a result, 

scepticism remains. Additional measures were needed to counterbalance the actual 

flexibilisation of employment relations. WSI research also investigated the European 

“role models” of flexicurity, The Netherlands and Denmark. 

Denmark is regarded as the foremost real-life example of flexicurity. In Denmark, a 

flexible labour market is combined with generous social security and active labour 

market policies – or what has become known as the “golden triangle”. One of the main 

features of the Danish employment system is a relatively low level of employment 

protection for employees with a standard contract. The main trade-off between flexibility 

and security can be seen among regular (standard) workers who experience a short 

spell of unemployment in between two jobs. In this context, the unemployment benefit 

system functions as a flexibility device enhancing the mobility and risk willingness of the 

ordinary workforce. For those who have problems finding a new job, active labour 

market policies ideally serve to upgrade the qualifications and motivation of the 

individual, and enhance the possibilities for labour market reintegration 17 . Since the 

majority of the workforce is easy to dismiss, Danish companies have traditionally not 

resorted to employing “atypical workers”, especially fixed-term contracts. In short, the 

ordinary workforce can be considered “temporary workers” due to high job mobility and 

high job turnover rates 18 . 

16 

Heide Pfarr (2007) Flexicurity – Ein Konzept für das Arbeitsrecht der Zukunft? WSI-Mitteilungen 08/2007, 

S. 416-420. 

17 

Claudia Bogedan (2009) Mehr als Flexicurity. Lehren aus der dänischen Arbeitsmarktpolitik, in: Arbeitsmarkt 

und Sozialpolitik; Seifert, Hartmut & Struck, Olaf (Hg.) VS Verlag für Sozialwissenschaften, Wiesbaden, 

S. 267-285. 

18 

Thomas Bredgaard/ Flemming Larsen/ Per Kongshoj Madsen/ Stine Rasmussen (2009) Flexicurity und 

atypische Beschäftigung in Dänemark. WSI-Mitteilungen 01/2009, S.31-38.

11 

“After the indices have been 

constructed, a dependency 

between the flexibility and 

precariousness of work 

has been established with 

statistical certainty by means 

of regression analysis. It was 

further revealed that the 

institutional regulation of 

employment does not 

necessarily imply an adequate 

effect in practice.” 

In the Netherlands two legal provisions gained prominence in the “flexicurity“ debate: 

firstly, the “verlofspaarregeling” (2001-2005) and secondly, the “levensloopregeling” 

(since January 2006). Both provisions give employees the opportunity to store time on 

lifetime working accounts and to use this time for paid leaves. Consequently they foster 

the equalisation of the ‚rush hour of life’. The Netherlands are the only country in Europe 

which has implemented a life course perspective so far. Individual and not company 

needs of flexibility are served 19 . Nevertheless, existing research points at characteristic 

limits of both provisions. While the “verlofspaarregeling” was only used by a rather 

small number of employees, particularly those, who did not face problems to combine 

work and care, the “levensloopregeling” runs the risk of being reduced to an instrument 

for early retirement 20 . 

In most European countries, however, flexible work is atypical work with the risk of 

precarious effects on working and living conditions. Seifert and Tangian (see footnotes 

22 and 23) show empirically that the more flexible the employment, the more precarious 

it is. For this purpose, two families of indices, of flexible work and of precarious work, 

are defined based on the Fourth European Survey of Working Conditions 2005 by the 

European Foundation for the Improvement of Living and Working Conditions. Two 

methodologies of constructing indicators are applied, one from the Hans-Böckler- 

Foundation, and one from the OECD. Both methodologies give very similar results. After 

the indices have been constructed, a dependency between the flexibility and 

precariousness of work has been established with statistical certainty by means of 

regression analysis. It was further revealed that the institutional regulation of 

employment does not necessarily imply an adequate effect in practice. For instance, 

Turkey and Greece which both have strict employment protection legislation have high 

labour market flexibility due to a large proportion of employees who work with no 

contract. Among other things, it has been shown that employment flexibility has the 

strongest negative effect on employability. This implies that there are serious arguments 

against the recent reconsideration of the role of social security attempted by the 

European Commission within the flexicurity discourse. The suggested shift from income 

security towards high employability cannot be implemented consistently. Our study 

provides empirical evidence that high employability is very difficult to achieve under 

flexible employment 21 . The flexicurity indicators developed at the Hans-Böckler- 

Foundation will help to monitor and analyse flexicurity on an empirical basis 22 . 

As a consequence, the views of the collective bargaining partners differ widely on the 

flexicurity approach. Both parties criticise the public policy measures in place which 

increasingly have been shaped by the influence of the employer organisations. Collective 

bargaining has resulted in various flexicurity provisions 23 . However, results are hard to 

achieve as security is low on the agenda of most employer organisations. Social 

problems accumulate in private service sectors, where collective bargaining is at its 

weakest. Trade unions thus voiced demands for more regulation, which has been 

rejected by the employer side. 

19 

Ute Klammer (2010) Flexibilität und Sicherheit im individuellen (Erwerbs-)Lebensverlauf – Zentrale 

Ergebnisse und politische Empfehlungen aus der Lebenslaufforschung der European Foundation, in: 

Gerhard Naegele (Hg.) Soziale Lebenslaufpolitik, VS Verlag. Wiesbaden, S. 675-710. 

20 

Philip Wotschack (2007) Lebenslaufpolitik in den Niederlanden. Gesetzliche Regelungen zum Ansparen längerer 

Freistellungen, in: Hildebrandt, E. (Hg.): Lebenslaufpolitik im Betrieb, Berlin: Edition sigma, S.241-258. 

21 

Hartmut Seifert/Andranik Tangian (2007): Flexicurity: Reconciling Social Security with Flexibility – Empirical 

Findings for Europe. WSI-Diskussionspapier, Nr. 154; August 2007. Düsseldorf. 

22 

Andranik Tangian (2009): Six families of flexicurity indicators developed at the Hans-Böckler-Foundation, 

WSI-Diskussionspapier, Nr. 168, November 2009. Düsseldorf. 

23 

For further information on co-determination in Germany see: http://www.boeckler-boxen.de/1518 (in German).

12 

Labour law and dismissal protection 

Dismissal protection was at the centre of the political debate on the flexibilisation of 

the German labour market. Empirical findings, in contrast, did not confirm the negative 

effects associated with the rigidity of dismissal protection. The first legislation in the 

context of the Hartz reforms was implemented with effect from 1 January 2004, leading 

to deregulation in the labour market. Dismissal protection was eased, inter alia, with the 

aim of creating new employment. Major research was conducted at the WSI to analyse 

the consequences of these changes. The main results were that no new jobs were 

created on the basis of the new dismissal rules. Nevertheless, the newly introduced 

entitlement to severance pay (Abfindungsanspruch) might lead to a change in the 

behaviour of employers in the future. Moreover, the existence of an agreed procedure 

between the employer and the works council establishing a list of the names of all those 

laid off, including social criteria (Interessensausgleich zwischen Arbeitgeber und 

Betriebsrat mit Namenslisten) will reduce the number of cases brought to court 24 . 

“The main results were that 

no new jobs were created on 

the basis of the new dismissal 

rules. Nevertheless, the 

newly introduced entitlement 

to severance pay 

(Abfindungsanspruch) might 

lead to a change in the 

behaviour of employers in the 

future.” 

In addition the 2007 WSI survey of works councils (WSI-Betriebsrätebefragung 2007) 

investigates the works councils’ experiences with “Namenslisten” in the case of 

dismissals. This agreed procedure between the employer and the works council 

establishing a list of the names of all those laid off can be used as an instrument by the 

employer when reducing the labour force at the enterprise level. This enables work 

councils to co-decide on dismissals, while at the same time dismissal protection is 

reduced for the individual. Research reveals that there are several problems connected 

with this instrument 25 . 

Moreover empirical findings prove that ending an employment contract in Germany is 

neither subject to major conflict between employer and employee nor expensive. A 

survey conducted by the WSI among human resource managers underlines that 

dismissal protection is not a hindrance if either the employer or employee wants to end 

the employment relationship. The majority of respondents reported that dismissal 

protection is not a hindrance to employing new persons. In sum, the results of the survey 

underline that neither a preventive nor a prohibitive effect of dismissal protection can 

be observed 26 . 

Nevertheless in the light of the institutional framework of the German model dismissal 

protection is an integral part and constitutes advantages in the complex interplay with 

other labour market institutions 27 . Thus, most employers act on basis of false 

assumptions when they argue for less dismissal protection. Moreover, by deregulating 

dismissal protection social security is negatively affected without any positive effects on 

employment 28 . 

24 

Armin Höland/Ute Kahl/ Karen Ullmann/ Nadine Zeibig (2004): Recht und Wirklichkeit der Kündigung von 

Arbeitsverhältnissen – Erste Erkenntnisse aus der Forschung, in: WSI-Mitteilungen 03/2004. 

25 

Stefanie Kremer/Nadine Zeibig (2008): Namenslisten bei Entlassungen – Ambivalentes Mittel für Betriebsräte 

WSI-Mitteilungen 06/2008, S.321-327. 

26 

Silke Bothfeld/Karen Ullmann (2004): Kündigungsschutz in der betrieblichen Praxis: Nicht Schreckgespenst 

sondern Sündenbock, in: WSI-Mitteilungen 05/2004. 

27 

Heide Pfarr (2007): Kündigungsschutz – fürs Arbeitsleben unverzichtbar, in: Arbeitsrecht im Betrieb, Heft 

10/2007, S.561. 

28 

Heide Pfarr/Nadine Zeibig (2006): Abfindungen statt Kündigungsschutz? – Reformvorschläge vom 

Kronberger Kreis, Sachverständigenrat und Hamburger Dreisprung, in: WSI Mitteilungen 08/2006. Further 

information (in German) can be found on the Hans-Böckler-Foundation’s website: http://www.boecklerboxen.de/2191.htm

13 

“...we should pay more 

attention towards taking 

advantage of the opportunities 

inherent in changes in paid 

employment and keep the 

corresponding risks in check, 

intervention is necessary in 

terms of employment and 

equal opportunities policy, 

in line with the realities of 

pluralism in the workplace. 

Empirical research can provide 

useful guidelines here.” 

Future challenges 

Labour market developments in Germany, such as the extension of atypical work like 

part-time and fixed-term work, highlight the need for adaptations in the social security 

systems. Growing inequality in earnings as well as increasing poverty pose problems for 

the German welfare state. German social insurances, especially the old-age pension, 

are a mirror image of the relative position in the labour market and income over a 

lifetime. Thus, the weaker the position in the labour market, the more are future 

pensioners in Germany facing the risk of poverty. 

There is a strong gender dimension to the problem as labour market policies have 

increased the employment rate by promoting part-time work and mini-jobs for women 

and as collective bargaining is at its weakest in female dominated service sectors. 

Considering wage rates in female professions, even standard part-time work does not 

pay enough to make a living nor does it provide for sufficient unemployment allowances 

and retirement pensions. 

Moreover, policies that consider rapid job-switches as a flexicurity approach ignore the 

effects on the individual and on society. Therefore, policies putting an emphasis on this 

type of flexibility should be rejected. 

Instead, we should pay more attention towards taking advantage of the opportunities 

inherent in changes in paid employment and keep the corresponding risks in check, 

intervention is necessary in terms of employment and equal opportunities policy, in line 

with the realities of pluralism in the workplace. Empirical research can provide useful 

guidelines here. Such research is required to identify typical features of the complex 

changes in the world of work and in society and to determine their impact. 

The most important starting point in defeating poverty is thereby the introduction of 

reforms to limit the growth of low-paid employment. Moreover it is necessary to install 

a national minimum wage, although minimum wages alone are not a guarantee of low 

rates of poverty as EU comparisons show. Therefore additional changes in the social 

security system are needed. The German insurance system is in need of reforms which 

make use of it strength and eradicate its weaknesses 29 . 

29 

Claudia Bogedan/ Simone Leiber (2009) Fit für die Zukunft: Vorschläge für eine moderne Sozialversicherung, 

WSI-Mitteilungen 07/2009, S. 400-401.

14 

Part 2 

Migrant women in care jobs: legal framework and 

working conditions in Germany by Mathias Maucher 

(SOLIDAR) * 

Features of provider structures and financing 

in the elderly and nursing care sector 

A comparative study (cf. Simonazzi 2008) on “care regimes and national employment 

models” based on common welfare state typologies places Germany, France, Luxemburg 

and Austria in the same country group. In these countries, elderly and long-term care 

systems share one central characteristic: dependence on care is understood as being 

a new form of social risk affecting the population as a whole, and this risk is met by a 

new system of social insurance – the contribution-based nursing and long-term care 

insurance scheme. There are three other country groups in the comparison: one 

dominated by tax-financed systems (e.g. Denmark, Finland, Ireland, Sweden, United 

Kingdom), one where the risk is met primarily on the basis of need-based social welfare 

systems (the Mediterranean countries), and the last, where family solidarity constitutes 

the dominating element. 

In terms of the relative weight of types of providers of elderly and long-term care, both 

for patients at home and for those in nursing care institutions, the situation in Europe 

around the middle of this last decade is quite a diverse one, with the overall trend being 

towards an increase in non-public provision. In Germany the provider distribution for 

home and institutional care is as follows: public operators 2% and 7% respectively, nonprofit 

operators 43% and 56%, and commercial providers 55% and 37%. We see, then, 

that commercial operators dominate in the area of home-care services and that nonprofit 

operators tend to provide a greater share of residential care, while publicly run 

schemes constitute no more than a marginal factor in both cases. In Austria, on the 

other hand, public and non-profit operators dominate clearly, with a 90% share of care 

services provided in patients' homes and a 51% and 27% respective share of the market 

in the area of institutional care. Commercial providers, on the other hand, account for 

a mere 10% and 22% of the market respectively. 

* 

This part of the country survey for Germany supplements the analysis made by the 

Hans Böckler Foundation on the main changes taking place in the German labour 

market in the face of current challenges and on the measures taken in the context of the 

crisis. The present article presents a specific sector and target group: it offers a 

summary of the working conditions of female migrants 30 in care jobs, and an overview 

of related legal issues 31 . The primary purpose of the present article is more to gather 

and present existing information than to analyse the findings 32 , and the article is based 

on text passages taken from various publications. 

30 

As most of the migrants working in domiciliary and nursing services are women, this article refers primarily 

to female workers, even though more neutral forms are used for the sake of simplicity. 

31 

In some cases comparisons will be made with Austria, the EU country most similar to Germany in terms of 

its institutional structures and cultural circumstances. 

32 

This study has included and evaluated internal documents of federations of welfare institutions in both 

Germany (AWO, DCV) and Austria (Volkshilfe). 

© ISCOS

15 

“Particularly in the non-public 

area, the proportion of lowskilled 

and low-paid workers 

has increased over the last few 

years as a result of higher cost 

pressure; in some institutions 

it is now significantly higher 

than the 50% share of qualified 

workers per institution 

stipulated by law.” 

Characteristics of the labour market in the area 

of assistance and care for the elderly 

The labour market in the area of elderly assistance and care is characterised by the 

following features applying to Germany and Austria (based largely on Simonazzi 2008): 

• Payment, working conditions and industrial relations 33 : 

1) Predominantly low wages and low status, paired with above-average fluctuation; 

2) Varying scope of coverage by wage agreements, particularly among private providers; 

3) Fragmentation of trade union representation, often along the line of tasks and 

qualification levels of employees as well as of employers and their associations; 

4) Wage negotiations often decentralised. All these characteristics are structural in 

nature, as they are the result of changing trends in our working society; as such, they 

also affect local workers who are German citizens. Basically, therefore, these factors 

are not influenced by economic migration. However, repercussions are inevitable if 

economic migration increases, and of course this does not improve the overall situation. 

• Qualification and on-the-job training: Scandinavian countries are the best in Europe; 

Germany and Austria have well-established, extensive and differentiated training 

systems with a number of recognised vocational qualifications; high qualification levels 

and ongoing training options for employees at the upper end of the qualification scale. 

• Proportion of low-skilled and low-paid workers: Particularly in the non-public area, the 

proportion of low-skilled and low-paid workers has increased over the last few years as 

a result of higher cost pressure; in some institutions it is now significantly higher than 

the 50% share of qualified workers per institution stipulated by law. Increased demand, 

especially in the last decade, has also created a parallel “market” for migrants – for the 

most part women from Central and Eastern Europe who are not infrequently in irregular 

employment. The sector is therefore characterised by a high degree of segmentation 

with regard to qualification levels, status, payment, working conditions, contractual 

conditions of employment and residence status. 

• In comparison with Great Britain and Sweden, the greatest challenge facing Germany 34 

is not a shortage of workers overall but a shortage of skilled workers. The second major 

issue is – as everywhere in Europe – the affordability of elderly assistance and care 

services, particularly for intensive or 24-hour care, and the affordability of domiciliary 

services for persons in need of care. 

• The “regularisation” of workers from the ten Central and Eastern European countries 

that joined the EU in 2004 and 2007, i.e. their freedom of movement and right of 

establishment (after expiry of restrictions and transitional phases), has resulted in a 

“change of direction” among persons working in the elderly assistance and care sector 

and encouraged economic migration with shorter phases of stay in the country of 

destination 35 ; this has been accompanied by initiatives for the regularisation of persons 

33 

In 2007, in the sector of health services and social services we saw the following proportions compared to the 

average shares of the overall economy: 1) proportion of full-time employees with permanent contracts: 43% and 42% 

respectively, versus 54%; 2) proportion of low-paid employees: 28% and 21% versus 25% (Eichhorst et al. 2010:29) 

34 

A. Simonazzi's article contains a great deal of additional information on the situation, the problems and solutions 

in the United Kingdom, and compares these primarily with the situation in Germany, France, Italy, Austria and 

the Scandinavian countries. She also discusses possible scenarios for the near future. UNISON (undated) also 

describes the problems these developments pose for trade union activities and for the organisation and 

representation of immigrants employed in the social services and health sector. 

35 

“In Portugal, for instance, the share of immigrants from Eastern Europe – which had been extremely high 

because of the relatively low cost of obtaining a visa – has diminished in favour of immigrants from Latin 

America. Eastern European workers are now moving in large numbers to the richer labour markets of the 

Northern European countries.” (Simonazzi 2008:19)

16 

who until now had irregular work and residence status, e.g. in Italy (cf. also SOLIDAR 

Briefing no. 18). This, however, also has an effect on individuals' tendency to remain in 

this type of employment as well as on any investment they themselves or their 

employers may consider to improve their qualification levels 36 . 

• Having similar welfare arrangements in the area of assistance and care for the elderly, 

Austria and Germany also share both formal and informal labour market elements, 

whereby in Austria the proportion of migrants is higher 37 . 

• Whereas in the year 2000 personnel costs made up approximately 75% of costs in the 

area of elderly assistance and care, today this proportion has, in places, fallen below 

50%. (ver.di 2010c) 

“Between 1999 and 2007, 

the number of persons in need 

of nursing or other special care 

who were actually receiving 

home care rose significantly 

from approximately 415,000 

to 504,000, corresponding to 

an increase of roughly 21.3%.” 

• Between 1999 and 2007, the number of persons in need of nursing or other special care 

who were actually receiving home care rose significantly from approximately 415,000 to 

504,000, corresponding to an increase of roughly 21.3% (Neuhaus et al. 2009:25) 

General data on migrant care workers 

• In Germany, women and persons from migrant families or economic migrants often 

tend to be part-time employees working at low wage levels (FES 2006; Schmid/Protsch 

2009; Kalina/Weinkopf 2010); low pay is also a characteristic of jobs in the sector of 

assistance and care for the elderly, which is the subject of this study. 

• The following can be said about the proportion of migrants to overall employees and about 

the volume of hours worked by migrant care workers: “In 2005, about 214,000 people (87% 

women) were working in the field of household-based long-term care services, 56,000 full 

time, 151,000 part time, 7,000 under other arrangements. It is estimated that about 100,000 

people are working as undocumented migrants. In other words: roughly one third of the 

non-family/non-informal caring work is done outside contractual arrangements 

recognised, regulated and (co-)funded by the long-term care insurance and uncovered by 

(standard) individual and collective labour rights.” (Maucher 2009:12) 

• These figures are supported by a survey conducted by the German Institute of Applied 

Nursing Research [Deutsches Institut für angewandte Pflegeforschung e.V., “dip”] 

which postulates a rough figure of 100,000 workers and a potential of 145,000 user 

households. 88% of the persons being cared for are in their 80s or older. The main need 

for support is in the area of domiciliary services. (Neuhaus et al. 2009:9f) 

• An article on elderly care published in the German weekly “Die Zeit” on 22 November 

2007 (“Altenpflege: Eine grosse deutsche Lüge” – Elderly care: a big German lie – 

36 

“For migrants with a temporary migratory project, regularisation of their employment position may have little 

appeal if they can trade it for higher wages. There is evidence that in Italy, with its maturing ‘migrant carer 

model’, the grey market has been prompt to exploit this model’s greater social acceptance by ‘only just’ 

undercutting regular workers, thus skimming the market and threatening once again to squeeze lower-middle 

income families out of paid care, were it not for monetary transfers and social subsidies. The duration of the 

migratory project may also affect the career progression and development of immigrants, because neither the 

employer nor the workers invest in their training.” (Simonazzi 2008:19) 

37 

“Through their use of monetary transfers to promote informal/family carers, Germany and Austria combine 

features of both formal and informal markets. In Austria, cash benefits, coupled with little regulatory oversight, 

a tradition of home care, and the permeability of the country’s Eastern borders (due also to historical ties) have 

encouraged a large influx of migrant carers, many of whom are illegal but are openly recruited by agencies for 

short-term, rotating care duties. In Germany, in spite of the prevalence of unconditional cash benefits, reliance 

on illegal foreign workers does not yet seem to have reached similar proportions. A strongly regulated market 

for skilled labour, combined with their use of monetary transfers to incentivise informal family carers, justifies 

their inclusion in a ‘mixed’ cluster to take account of the coexistence of formal and informal care markets, 

albeit with differing reliance on foreign minders.” (Simonazzi 2008:18) 

© ISCOS

17 

“Many of the Central and 

Eastern European women 

are well qualified in their 

original professions and often 

find themselves doing not 

much more than cleaning, 

cooking, shopping and providing 

basic care at a level authorised 

by the employment office 

for persons employed as 

home helpers.” 

http://www.zeit.de/2007/48/Pflege), presents the following calculation: “The nursing 

and long-term care insurance scheme spends approximately 630 million euros per year 

on 100,000 persons in need of care who are being cared for at home, and 1.51 billion for 

the same number of persons in institutional care. Without the illegal workers who care 

for an estimate of well over 100,000 elderly Germans, it would therefore have to spend 

roughly one billion euros more.” (Neuhaus et al. 2009:31) 

• Irregular migrants employed in private households offer a particularly significant cost 

advantage, because employing them involves no ancillary wage costs: according to 

estimates, in and around 2006 they earned an average of € 600 to € 800 per month 

(excluding room and board) 38 . If legally employed local skilled workers were to provide 

the care, this amount would be at least five times higher, and even more for patients 

requiring 24-hour care. The situation in Austria is similar: according to estimates, 

hourly wages of € 7 are paid in the first case, vis-à-vis € 24 for a skilled careworker. In 

Germany, 24-hour care provided by nursing services employing professional personnel 

costs between € 3,000 and € 5,000 per month in 2006 39 – an unaffordable expense for 

most patients and their families, even if benefits under the nursing and long-term care 

insurance scheme are factored in (the care benefits; and even in cases where non-cash 

benefits are also granted), particularly as any additional treatment that may be required 

is not generally covered by the long-term care insurance. 

• Many of the Central and Eastern European women are well qualified in their original 

professions and often find themselves doing not much more than cleaning, cooking, 

shopping and providing basic care at a level authorised by the employment office for 

persons employed as home helpers. Depending on the state, they receive between € 967 

and € 1,177 per month and are covered under the health, pension and unemployment 

insurance schemes, without however being entitled to unemployment benefits. Even 

though collectively agreed working time is 38.5 hours per week, many of these women 

are responsible for the patients in their care around the clock (Schmidt 2005:55). Not 

all of them have a living area of their own. Asked about their wishes, all of them name 

compliance with set working hours – there are, it seems, quite a few cases where the 

working hours laid down in the contract do not match the time actually worked – and 

weekends off from time to time (Schmidt 2005:56f). 

38 

Other estimates supporting these figures were found in additional bibliographical research: “Migrant carers, in 

particular from Poland, the Czech Republic and Slovakia, are living in thousands of German households and are 

involved in 24/7 care and household work. Individuals or families employing them on average pay 800 to 1,000 

€ per month, with board and lodging included.” (Maucher 2009:12) 

39 

According to a 2005 estimate, costs for this type of care provided by persons in a regular employment 

relationship ranged between € 2,560 and € 4,090, four to six times more than the care benefits for patients at 

care level III.

18 

Sector-specific pay and coverage by collective 

wage agreements in Germany 

• Ver.di notes three tendencies (ver.di 2010b): 

1) Fewer employment relationships are governed by collective wage agreements; 

2) Existing collective wage agreements are sidestepped; 

3) A number of providers “try to counteract the financial pressure by allowing working 

conditions to deteriorate and employing less qualified personnel. More than one fifth 

of all home-care workers (22 per cent) are employed on the basis of so-called ‘minijobs’. 

The proportion of precarious employment in the home care market is 

significantly higher than for persons working in institutional care (10 per cent). 

However, there is a growing tendency towards limited part-time work/incidental 

employment in both areas” (ver.di 2010b). 

“In the former West Germany, 

carers must now be paid at 

least € 8.50 per hour, while in 

the eastern part of the country 

the minimum is € 7.50. 

On 1 January 2012 and on 

1 July 2013, the wage floor will 

be increased by approximately 

€ 0.25 in east and west alike.” 

• According to the German Federation of Members of the Nursing Professions 

[Berufsverband for Pflegeberufe, DBfK], roughly one third of carers work for unethical 

wages, especially those whose employers are not bound by collective agreements. 

“More than anything else, the extreme competitive pressure from commercial 

providers and their wage-dumping policies when hiring carers had caught the 

attention of charitable associations. In March 2008, several employer organisations 

followed the lead of the Workers' Welfare Organisation [Arbeiterwohlfahrt, AWO] and 

joined forces with ver.di to demand the inclusion of caregiver services in the Employee 

Posting Act [Arbeitnehmer-Entsendegesetz, AEntG]” (DGB 2010). The Association of 

Local Government Employer Organisations [Vereinigung der kommunalen 

Arbeitgeberverbände, VkA] also joined the initiative. 

• Its result: a permanent and unrestricted minimum wage and therefore a legally 

binding wage floor for some 565,000 workers, in force in Germany since 1 August 2010. 

In the former West Germany, carers must now be paid at least € 8.50 per hour, while 

in the eastern part of the country the minimum is € 7.50. On 1 January 2012 and on 1 

July 2013, the wage floor will be increased by approximately € 0.25 in east and west 

alike. “The care market is characterised by ‘cut-throat competition in certain sectors’, 

says Rainer Brückers, former chairman of the AWO national board of management, 

adding that ‘the wage spiral has been spinning dangerously downwards for years 40 ’. 

Low wages constitute a risk for the quality of care services. The minimum wage will 

help keep the ‘cheap at all costs’ principle in check” adds Brückers (DGB 2010), 

chairman of the commission appointed by the Federal Ministry of Labour and Social 

Affairs to set a minimum wage. 

40 

In spite of strong resistance (coming above all from commercial providers), the Employee Posting Act was 

expanded to include “Working conditions in the care sector” as Part 4 of the Act. These provisions stipulate 

that the Federal Ministry of Labour and Social Affairs must appoint an equal-representation commission 

including employee and employer representatives, with the goal that a minimum wage should be agreed by a 

majority of at least 75%. This commission should include members of the competent trade unions and employer 

federations in the care sector as well as Caritas and Diakonie. 

© ISCOS

19 

“Many carers from the EU 

accession countries have 

set themselves up as selfemployed 

workers in their 

home countries (independent 

entrepreneurs), so that they 

have health insurance and 

social security. The German 

family must conclude a service 

or work contract with the 

foreign worker. This means 

the relationship is not an 

“employer-employee 

relationship” but a “clientcontractor 

relationship”.” 

Legal issues surrounding the employment of 

foreign home helpers and carers 41 

In order to work in Germany, Central and Eastern European workers need an EU work 

permit, which, however, the Federal Employment Agency [Bundesagentur für Arbeit, 

BA] does not grant for home-care services and home-care givers. This means that 

during the transitional regulations in force until 2011 private persons cannot legally 

conclude employment contracts with carers from Central or Eastern Europe. Families 

therefore cannot offer employment in this field directly and act as employers. 

In order to legally hire someone from Central or Eastern Europe in the domestic 

services sector, one of the four options outlined below must therefore be chosen. 

• Referral of home helpers by the central office for foreign and professional workers (ZAV) 

of the Federal Employment Agency. ZAV allows men and women from Bulgaria, Poland, 

Romania, the Slovak Republic, Slovenia, the Czech Republic and Hungary to work 

regularly for three years in households with persons needing care. An unrestricted EU 

work permit may be applied for after 12 months of uninterrupted work. 

• Cross-border self-employed work by carers and home helpers: As a consequence of 

the freedom to provide services, self-employed workers and foreign companies may 

temporarily offer their services in other EU countries. Neither the company nor the 

self-employed worker need work permits to do so. Many carers from the EU accession 

countries have set themselves up as self-employed workers in their home countries 

(independent entrepreneurs), so that they have health insurance and social security. 

The German family must conclude a service or work contract with the foreign worker. 

This means the relationship is not an “employer-employee relationship” but a “clientcontractor 

relationship”. In this case the carer must be able to provide evidence that 

he/she also works for other clients. Otherwise the employment relationship could be 

seen as a form of false self-employment. 

• Posting of service company employees to jobs abroad: Foreign companies may 

temporarily offer their services in other EU countries. It is legally possible to send care 

workers to temporary postings in another country. Once again in this case, the staff of 

the company does not need work permits. A so-called posting or assignment of workers 

abroad can be deemed to take place if workers are employed by a company (e.g. a 

caregiver service) in Central or Eastern Europe (and pay taxes and social security 

contributions there), if the posting is temporary (up to twelve months), and if the 

services provided in Germany are being rendered on behalf of the employer. These cases 

also require the conclusion of a service or work contract between the German family 

and the company. The client is therefore not the employer of the carer, but instead pays 

the company which in turn pays its employees a normal wage. The workers are covered 

by German work-protection regulations. Wages paid are not subject to minimum 

restrictions as long as there is no pay floor in the sector concerned. With the 

introduction of a minimum wage requirement in the care sector via the inclusion of this 

type of activity in the Employee Posting Act, classification of the work – i.e. as qualified 

care giver or not – is therefore the criterion for deciding whether the provisions of the 

Act are to apply and entitlement to payment of the minimum wage exists. 

41 

This section is largely taken from Neuhaus et al. 2009:28ff and has been slightly edited and shortened by the 

author. For a more in-depth treatment, see also ver.di 2010a.

20 

• Referral of home service employees by an agency: Meanwhile some German companies 

serve as agencies for options 2 or 3 and organise their services so as to cover the 

various facets of hiring and contracting. In addition to referral services, they often offer 

complete organisation of the cross-border activity. Their services are governed by a 

special contract that includes a consultancy fee as (in most cases) an additional 

expense. 

This list illustrates the interaction between national provisions and procedures and rules 

of Community law as they affect the complex body of regulations involving freedom of 

movement, freedom to provide services, posting of workers and provision of temporary 

workers for this sector. The last years have witnessed numerous EU-level political 

initiatives and amendments in Community law (e.g. a Directive on temporary agency work 

in 2008, 2008/104/EC) as well as ongoing lively and controversial debate in response to 

judgments of the European Court of Justice in cases involving the posting of workers 

abroad (Viking, Laval, Rüffert, Luxemburg vs. Commission). 

“Foreign companies may 

temporarily offer their services 

in other EU countries. 

It is legally possible to send 

care workers to temporary 

postings in another country. 

Once again in this case, 

the staff of the company does 

not need work permits.” 

There are cooperation structures between referral agencies and personnel agencies in 

the home countries of the workers that refer self-employed service workers, as well as 

cooperation either directly with the self-employed workers themselves or with foreign 

caregiver services who temporarily post their staff in Germany. There have also been 

companies founded abroad with foreign partners (personnel referral agencies or 

caregiver services) in order to ensure correct implementation and referral. (Neuhaus et 

al. 2009: 79ff) 

© ISCOS

21 

“Pay for home helpers 

and carers from Central 

or Eastern Europe generally 

does not correspond to 

“normal wage levels; 

the services provided and 

the working times are 

sometimes difficult 

to reconcile with regular 

breaks and rest times”.” 

Challenges facing social partners, 

service providers and law-makers 

• Although atypical employment relationships may indeed offer additional employment 

chances, particularly in the services sector and for low-skilled workers, they generally 

fail to meet applicable standards set by collective agreements, individual companies 

or entire sectors with regard to working hours, pay and work security. Eichhorst et al. 

(2010:6) are therefore right in suggesting that the re-regulation of atypical forms of 

employment should be carefully considered, even though opinions on the concrete 

wording of the regulations may differ depending on perspectives – employment policy 

vs. socio-political orientation – and stakeholders. 

• Pay for home helpers and carers from Central or Eastern Europe generally does not 

correspond to “normal wage levels; the services provided and the working times are 

sometimes difficult to reconcile with regular breaks and rest times” (Neuhaus et al. 

2009:14). These authors are also quite right when they conclude that “a further 

important socio-political component is the issue of regulating employment 

circumstances and securing the rights” (Neuhaus et al. 2009:14) of employees. 

• A starting point for political action is therefore also the need to change the financial 

framework conditions of private households within the scope of the nursing and longterm 

care insurance scheme and in the tax system, as these are the circumstances 

that affect decisions in favour of low-cost irregular foreign workers. 

• In the context of complete free movement of workers starting in 2011: 

1) Clarification of permissible options under work and residency laws for the 

employment of citizens of the ten Central and Eastern European Member States of the 

EU that would satisfy the provisions of European law; 

2) Easily accessible and understandable information that is legally binding. 

Together, these two improvements would help private households/persons wanting to 

legally employ home helpers and carers under fair working conditions and provide 

certainty, above all for the workers themselves. They would also constitute an 

important prerequisite for decent, fair, equal and non-discriminatory working 

conditions. In Austria, including personal care as an unrestricted trade in the Home 

Care Act has brought legal certainty and immunity from prosecution for families 

seeking help and for workers alike. The Act gives carers rights and employee status 

and makes it easier for them to demand work standards and improvements guaranteed 

under labour law (like time off); it also facilitates trade union organisation and 

representation (for more details on these points and on trade union involvement, cf. 

ver.di 2010a) 

• Looking at the work of foreign home helpers and carers in home care situations, we 

see absolutely clearly that in the interest of legal certainty as well as to guarantee 

decent working conditions and to strengthen the role of the social partners and the 

relevance of collectively agreed agreements there are still several issues in need of 

immediate clarification. There may also be a need to amend laws and procedures. And 

here again there is a lack of comprehensive, easily accessible, understandable 

information available from a single central source.

22 

• No social contributions are made for persons in irregular employment, and these 

carers work without contractual security or guarantees under labour law (working 

hours, time off, leave, social contacts, information etc.). This prevents fair competition 

among providers, as competition under the conditions sketched out above does not 

take place in an environment based on compliance with legal provisions and 

collectively agreed standards on service quality. Failure to pay taxes or social insurance 

contributions and non-compliance with the provisions of labour law – in addition to 

low pay – destroys the competitiveness of service providers operating legally in the 

domestic market” (Neuhaus et al. 2009: 91). Moreover, professional providers are 

subject to quality standards and measures of quality control. 

“Failure to pay taxes or social 

insurance contributions and 

non-compliance with the 

provisions of labour law – 

in addition to low pay – destroys 

the competitiveness of service 

providers operating legally in 

the domestic market” 

• Furthermore, the national and regional federations of non-profit service providers of 

care services view the removal of potential carers from their home countries (“brain 

drain”) critically and are concerned about these persons' private situations (e.g. in 

families with dependent children or elderly parents). 

• Minimum wage in the care sector: Non-profit service providers of care services and 

some German states [Länder] see the risk that a pay floor may become a guideline for 

reimbursement of costs by health insurance companies and the long-term care 

insurance system. Despite the fact that the provisions to refinance carers via the 

Employee Posting Act [Arbeitnehmerentsendegesetz, AEntG] are not affected in 

principle, things could be quite different in actual practice. Together with the 

Confederation of German Trade Unions and ver.di, they call for pay reflecting the actual 

range and performance of services delivered; this not only guarantees the quality of 

the caregiving tasks but also gives social recognition to work with the elderly and the 

sick. 

© ISCOS

23 

About the project 

This case study was written in the 

frame of the “Decent Work for All: A 

Key for Effective Industrial Relations”, 

a one-year project which aims to 

produce recommendations on how to 

improve working conditions around 

Europe in sectors with higher 

incidences of precarious working 

conditions (ie construction, health and 

long-term care) and more vulnerable 

groups (ie youth, undocumented 

migrants) through coordinated efforts 

by governments, employers and trade 

unions in the framework of social 

dialogue. It also looks into the role of 

social partners in fighting precarious 

labour and promoting decent work 

and quality jobs. 

This briefing, coordinated by SOLIDAR, 

was produced by Hans-Böckler- 

Stiftung in Germany. www.boeckler.de 

All “Decent Work for All: A Key for 

Effective Industrial Relations” briefings 

are materials on www.solidar.org 

SOLIDAR is a European network of 52 

NGOs active in over 90 countries 

working to advance social justice in 

Europe and worldwide. SOLIDAR 

lobbies the EU and international 

institutions in three primary areas: 

social affairs (more social Europe), 

international cooperation (develop - 

ment cooperation) and education 

(lifelong learning for all). 

Authors: 

Claudia Bogedan, Birgit Kraemer 

and Mathias Maucher 

Responsible editor: Conny Reuter 

Sub-editor: Sarah Hammerton 

Translation (Part 2): Nicole Gentz 

Project Coordinators: 

Mauro Striano and Mathias Maucher 

Publication Coordinator: 

Abigail Goundry 

Printed on recycled paper 

©SOLIDAR 

July 2010 

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This publication has been produced with the 

assistance of the European Union. The content 

of this publication is the sole responsibility of 

SOLIDAR and can in no way be taken to reflect 

the views of the European Union. 

decent work 

decent life 

Supported by DG Employment 

and Social Affairs.

The changing labour market in Germany in times of crisis - Solidar

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