Officially, Germany's labour market is closed to eastern European workers. Unofficially, they are arriving in large numbers, writes Derek Scally.
German meat producer Tönnies likes to blow its own trumpet. Visitors to the company's website learn that it is a "world-class company" with "the most modern meat production facility in Europe".
By German standards, Tönnies has developed a very modern approach to its employees too: of its 4,900 workers, some 2,050 are non-German, a figure that grows each month. These new arrivals are generally non-skilled and earn as little as €3.50 an hour, compared to skilled German workers who can earn up to €25 an hour. At the last count, more than 15,000 German butchers are unemployed, nearly all laid off since 2004.
Officially, the German labour market remained closed to workers from 12 new EU member states since the last two waves of accession. And yet tens of thousands of workers from Poland, Slovakia, Romania and Bulgaria have found ways to find legal - and not so legal - jobs. Few official figures exist but in the meat sector alone, more than 17,000 non-German workers have found work in the last three years, mostly replacing higher-paid German staff. The phenomenon is mirrored in other sectors including contract cleaning, sales, and even the normally well-paid metalwork sector.
Germany's labour market might be closed, but EU laws allowing free movement of services have created a new grey employment market of sham self-employment and slave wages.
Two years ago, a squad of finance ministry officials uncovered an illegal employment network in which 1,500 Hungarian workers were given jobs that paid €3 an hour, while the unscrupulous employment agencies that placed them earned more than €100 million for their services.
The trend raises the question of whether it was such a good idea to keep Germany's labour market closed in the first place. The decision was borne of political necessity. After unemployment shot past the 4 million/10 per cent mark and continued on past 5 million, the Schröder government was in an impossible situation. "We were being hammered in the polls," remembers one former government official. "To have opened the labour market would have been political suicide." When the labour shutters stayed down in 2004, German employers began exploring every labour market loophole available. They have applied EU laws allowing the free movement of services with what one German union official calls "mafia methods".
"It leads to a very difficult work climate, with people working side by side for drastically different salaries," says Günther Regneri of the NGG union, which represents meat industry workers. The wage war continues: since January, he says, Poles are being replaced in meat companies by Romanians for hourly wages sometimes under €3. "I've heard terrible tales of Romanians being promised €6, getting half of that and, from that, having to pay horrendous sums for accommodation," says Regneri. "If they complain they're beaten, fired and sent home."
WHEN IT COMES to labour law, however, the grand coalition in Berlin is deadlocked. As one of the few EU countries without a general minimum wage, unions are campaigning for the introduction of a €7.50 minimum wage to help workers in low-paid jobs.
Social Democrat (SPD) leaders have backed that call and the union demand for sector pay tariffs for people such as meat industry workers who are classified as self-employed and technically don't earn a wage.
But the employer-friendly wing of Chancellor Angela Merkel's Christian Democrats (CDU) has blocked them effectively at every turn. Already it's clear that one of the hottest issues of the next general election in 2009 will be "Lohnsklaverei" - wage slavery.
Everyone agrees that German labour laws need urgent reform, but the ideological SPD/CDU blockade in Berlin means that the government can, at best, merely tinker with existing laws. A cabinet meeting later this month will debate opening the labour market in sectors where there is currently a skills shortage.
The German Chamber of Industry and Commerce (DIHK) has welcomed the move as a step in the right direction. "Germany did itself a disservice by closing itself off to eastern Europe after 2004," says DIHK spokeswoman Ute Brüssel. The DIHK warned then and now that, when Germany finally opens its labour market, it will find that highly qualified staff have long since settled in Ireland and Britain. "One doesn't have to completely open the market, but let in qualified people who are really needed now, who perhaps have studied here and speak German," says Brüssel. "You can't be the world's leading exporter and then put up barriers to the world at home."
Employers' organisations complain that, by putting its head in the sand and keeping the labour market closed, the government has shirked the pressing need to make Germany's labour market fit for a future with foreign workers.
Officials at the SPD-controlled federal labour ministry reject the employers' criticisms. "Employers say, 'open the labour market and things will solve themselves' but that's an oversimplification," says a ministry spokeswoman. "The unemployment and stagnant wages of the last years mean we'd have had a downward spiral to €3 or even €2 an hour. Now things are improving in the labour market, we can only hope wages will improve too."