Berlin – IG Metall opposes the misuse of service contracts. “Companies are increasingly using service contracts to engage in wage dumping. Through this type of precarious employment, they are creating zones without works councils and collective bargaining agreements in key areas of the value chain. IG Metall criticizes this abuse—but the issue is not the contractual structure of the service contract itself,” said Jörg Hofmann, Second Chairman of IG Metall, on Tuesday in Berlin during the presentation of a nationwide works council survey on the use of service contracts.
IG Metall is calling on lawmakers to finally establish order in the labor market through statutory regulations. “The abuse of work contracts must be stopped. This requires better disclosure requirements and greater participation rights for works councils at the host companies,” Hofmann demanded. Clear criteria—as provided for in the coalition agreement—are necessary to distinguish work contracts from, for example, temporary staffing and “solo self-employment.” In addition, IG Metall is calling for an obligation on the part of employers to inform the works council about any service contracts in use and the contracted company, as well as whether there is a works council at that company and whether and which collective bargaining agreements apply there. Furthermore, the union representative said, works councils need concrete co-determination rights in cases of outsourcing.
In the metal and electrical industries, the sectors most affected are contract logistics, industrial services, and development service providers. “We are not criticizing the sensible division of labor between vehicle or machinery manufacturers and specialists who provide services for this purpose; however, a practice of outsourcing has developed alongside this that relies solely on wage dumping to reap extra profits,” said Hofmann. Elsewhere, employers have demanded adherence to collective bargaining unity: one company—one union. “This applies in particular to services provided under contracts for work. If employers abandon the principle of collective bargaining unity here, they risk the highly interconnected production chain no longer benefiting from the peace obligation of the regional collective bargaining agreement.”
According to the latest IG Metall survey, in which over 4,000 works council chairs participated, companies are increasingly using subcontracting as a tool. More than two-thirds of companies (69 percent) now purchase services from other firms. In nearly three-quarters of all cases, employees of subcontracting firms are forced to work under worse conditions than their permanently employed colleagues. “The figures prove it: service contracts are becoming the new standard in companies and are thus undermining the existing collective bargaining rules,” said Christiane Benner, executive board member of IG Metall.
The survey results also show that since 2012, the proportion of companies where service contracts are replacing permanent positions has risen from 5 to 13 percent. Over the past three years, works councils have reported an increase in service contracts in nearly one-quarter of companies (22 percent). In one out of every three companies, production tasks are outsourced; assembly, logistics, and research and development are also frequently affected. “Most employers refuse to adopt voluntary rules governing the use of service contracts. Sixty-nine percent of companies use service contracts. At the same time, works councils have succeeded in regulating the issue through a works agreement in only five percent of companies.” Even though IG Metall has succeeded in securing better conditions at many companies that use service contracts, Benner criticized the lack of an adequate legal framework.
Hofmann announced that IG Metall would step up pressure on companies and workplaces: “On September 24, we will apply pressure at nearly all locations of German automakers through rallies and high-visibility actions. In addition, the chairs of the general works councils at automakers and suppliers will issue a call to action clearly outlining their demands to policymakers. Widespread poster campaigns and further actions will follow in the coming weeks.”
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