The German government adopted a draft Minimum Working Conditions Act on July 16, 2008. The purpose of this legislative initiative is to protect employees of industries where only a small portion of employees are unionized and as a result do not benefit from collective agreements setting minimum working conditions.
The proposed legislation envisions the creation of a permanent Main Committee whose role will be to investigate and decide whether minimum wages have to be determined as minimum working conditions. In addition, it will be its role to set the specific amount of minimum wages. The Main Committee will be composed of six independent experts who by virtue of their experience are in a position to assess the economic and social consequences of minimum working conditions. The Main Committee shall be assisted by Technical Committees composed of employers and employees from affected industries.
Up to now, minimum wages have been set solely by collective bargaining agreements. In general, the provisions of these agreements apply only to employers (as members of an employer association) and employees (as members of a trade union) that are parties to these agreements. In some industries, it is possible by government order to have a collective agreement setting binding minimum conditions for an entire industry sector.
There is uncertainty as to whether this legislative initiative will be successful. First, the law needs to be approved by the Federal Council of Germany to take effect. Second, the law raises issues of German constitutional law because it arguably undermines the union’s constitutionally recognized autonomy to negotiate industrywide minimum wages. We will report further.