In the Bundestag
More collective bargaining, more pay equity, fairer competition: Public contracts awarded by the Federal Government should only go to companies that pay their employees in accordance with collective wage agreements. The Bundestag has passed the law presented by the Federal Government.
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Construction work on the A3 motorway in the Ruhr region: Federal contracts are an important economic factor.
Photo: imago images/Rupert Oberhäuser
In future, companies will have to grant their employees collectively agreed working conditions when they carry out contracts for the Federal Government. This applies, for example, to pay, holiday entitlements and provisions on rest periods. The Bundestag has passed the government draft for the Federal Collective Bargaining Compliance Act.
The law is to apply to awards at the federal level from 50,000 euros. Bureaucracy, verification requirements and controls should be kept to an absolute minimum: The law stipulates that the pledge to honour collective agreements should be made as a simple, straightforward declaration in the award procedure.
Incentives for more collective bargaining
Federal Labour Minister Bärbel Bas commented on this initiative: "We are putting a stop to wage dumping with taxpayers' money." Companies that pay their employees according to collective agreements should not be at a disadvantage. Currently, companies bound by collective agreements are often at a competitive disadvantage: They are often unable to secure contracts or do not apply at all. This is because competitors who are not bound by collective agreements can usually offer their goods and services more cheaply due to lower labour costs. This distorts competition.
The number of companies bound by collective agreements and the number of employees covered by collective agreements has fallen steadily in recent years. In the past, three out of four jobs were covered by collective agreements; today it is only one in two. This has a negative impact on wages and working conditions. According to Bas, with the Federal Collective Bargaining Compliance Act, the Federal Government is creating an incentive for more collective bargaining, adding that collective agreements are "the basis for decent wages and good working conditions".
The Federal Government as client
Some federal states already have similar regulations. The law is intended to restrict predatory competition based on wage and personnel costs at the federal level, as well, and it comes at just the right time: The Special Fund for Infrastructure will be used to award numerous public contracts in the coming years. A lot of money will flow into the modernisation of bridges, hospitals and school buildings. And anyone working on behalf of the Federal Government "should also be paid properly", said Minister Bas.