Monday, October 25, 2021
DGB calculation on wage dumping
Avoidance of collective bargaining costs the citizens and the state billions
Higher wages mean higher social security contributions, higher tax revenues and more purchasing power. But because fewer and fewer companies are paying in accordance with collective bargaining agreements, the state and citizens are missing out on billions, the DGB calculates. A new government urgently needs to do something against tariff flight and wage dumping.
Social insurances in Germany lose around 30 billion euros every year due to collective bargaining and wage dumping. In the west, the shortfall in income for social security amounts to 19.5 billion euros, in the east to 10.3 billion euros. This emerges from calculations by the German Trade Union Federation (DGB), the results of which are available to the editorial network in Germany.
According to the calculations, which, according to the DGB, are based on the structure of earnings survey by the Federal Statistical Office, the federal, state and local governments also collect around 18 billion less in income tax for the above-mentioned reason. “Strengthening the collective bargaining agreement is one of the urgent tasks of the next federal government,” said DGB board member Stefan Körzell to the RND. Avoidance of collective bargaining costs the general public billions. “This money is missing for social equality and for urgently needed investments in infrastructure and education.”
Körzell suggested: “We need a federal tariff loyalty law so that public contracts and subsidies only go to companies bound by collective bargaining agreements.” With a public contract volume estimated at up to 500 billion euros annually, a mandatory collective agreement regulation would be an enormous incentive for companies to commit to collective agreements, he argued. In addition, it must be easier to make collective agreements generally binding for all companies in an industry.
According to the DGB calculations, the lack of collective bargaining coverage also has a direct impact on the purchasing power of employees: According to the trade union federation, employees would have around 42 billion euros more in their wallets per year if there were widespread collective bargaining coverage. In 2020, according to the Economics and Social Science Institute (WSI) of the Hans Böckler Foundation, only 53 percent of employees in the west and 43 percent in the east were subject to collective bargaining agreements.