Germany's Bundestag has passed the so-called Tariftreuegesetz, a collective bargaining compliance law, requiring companies awarded public federal contracts to meet fair working conditions. The law was passed on Thursday with the votes of the CDU/CSU, SPD and Greens. Trade unions broadly welcomed the legislation but raised specific criticisms, while businesses warned of increased bureaucracy.
The Tariftreuegesetz is a core concern of the SPD in its coalition with the CDU/CSU. It is designed to remove the competitive disadvantage faced by companies that pay collectively agreed, and therefore often higher wages. The law also aims to limit wage and labour cost undercutting in the awarding of public contracts. The coalition partners reached agreement on the law on Tuesday after lengthy negotiations.
Federal Labour Minister Bärbel Bas (SPD) welcomed the parliamentary vote, pointing to the high level of state spending linked to the special fund. "We are investing 500 billion euros in this country and it is entirely right that companies which stand for good working conditions should also benefit from this," she said.
The reach of the new regulations is more limited than originally intended. The area of supply services, covering deliveries of vehicles, equipment and materials, is exempt from the law. According to the CDU/CSU parliamentary group, this reduces the scope of the law by one third. The defence sector is also exempt. In addition, a threshold of 50,000 euros applies, only contracts above this value fall under the law.
CDU MP Wilfried Oellers stressed during the Bundestag debate that companies would not be required to be bound by collective agreements in order to receive a federal contract. They must, however, meet defined conditions. "That is an important distinction," said Oellers. He added that companies without collective agreements are not automatically worse. The Federal Labour Ministry will base the definition of working conditions on representative collective agreements.
Oellers expressed doubts about whether the law would actually lead to greater collective bargaining coverage. At the same time, he acknowledged the law would "certainly involve some effort." The achievement of its goals and the bureaucratic burden would therefore be monitored, and "we may need to make corrections afterwards."
The IG Metall union said the law does not go far enough. It argued the 50,000 euro threshold is set too high, with around a quarter of all public contracts falling outside the law as a result. The union also criticised the exemptions for supply services and defence: "As a result, the collective bargaining criterion plays no role in a large proportion of the upcoming state investments."
The food, beverages and catering union NGG also criticised the level of the threshold but expressed overall satisfaction with the legislation. The regulations are particularly important for the awarding of catering contracts in federal canteens. "It is only fair that basic labour standards such as collective agreements must be observed by the state when spending workers' tax money," said NGG chief Guido Zeitler.
Sharp criticism came from employers. "The federal government preaches cutting red tape but with the so-called Tariftreuegesetz is creating new and complicated regulations," said Steffen Kampeter, Managing Director of the Confederation of German Employers' Associations. "The Bundesrat should refuse to approve this botched law."
The construction sector took a more conciliatory stance. "In principle, a statutory regulation on collective bargaining compliance is not necessary and, despite all promises, once again leads to more bureaucracy and liability risks," said Felix Pakleppa, Director General of the German Construction Industry Association. He did, however, highlight significant simplifications in the requirements for proving collective bargaining compliance during the parliamentary process as a positive development.
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