Saxony is obligated to maintain fair wages according to DGB's perspective. - Saxony is legally required to adhere to set tariffs, according to DGB's stance.
In Saxony, the German Trade Union Confederation (DGB) has raised concerns about a scandalous practice where the cheapest providers often win public tenders, leading to significant financial losses for social insurance, taxes, and purchasing power.
The Tariff Loyalty Act, a legislation requiring public contractors to adhere to collective wage agreements, aims to prevent social dumping, protect employees' social insurance rights, and influence public procurement by conditioning award criteria on tariff loyalty. This law, if enforced effectively, could have several implications for the labor market in Saxony.
Firstly, the Act could improve wage standards and social protection for workers on publicly tendered projects, reducing losses from unpaid or underpaid social insurance contributions. Secondly, it could level the competitive playing field for companies bidding on public tenders by discouraging bids based on cutting labor costs illegally. However, there might be potential administrative burdens for firms to prove compliance with tariffs and social insurance contributions during public tendering.
Moreover, the Act could potentially decrease risks of social insurance revenue losses if it effectively curbs undeclared work or non-compliant employment practices in public contracts. The Act, if passed, would require companies to grant remuneration, Christmas bonus, vacation, and rest periods as in industry-wide tariff agreements.
However, the precise implications for Saxony’s labor market and social insurance depend on the enforcement rigor and regulatory details specific to that region and the Act's current formulation in Germany. The modernization of the Saxon procurement law has been delayed and blocked for years, according to the DGB.
Markus Schlimbach, the DGB's chief in Saxony, sees the federal Tariff Loyalty Act as a stepping stone for the state government. He emphasized that especially in times of structural change and demographic development, these losses cannot be afforded by society. Schlimbach also commented that whoever supports cheapskates with tax money cannot complain about skilled labor shortages and lower income for social insurance and taxes.
The DGB calls for tying the allocation of public funds by the state and municipalities to tariff wages and good working conditions. They see the federal government's vote on the Tariff Loyalty Act as a stepping stone for the state government in Saxony. Improvements to the bill are still necessary in the parliamentary procedure, according to the DGB.
The federal cabinet has approved the draft of the Tariff Loyalty Act, but the costs for the public hand could increase due to the Act. The Act, if passed, would provide a significant boost to workers' rights and fair labor conditions in public procurement, potentially leading to a more equitable distribution of wealth in Saxony.
[1] URL for EU-US tariffs [2] URL for defense spending [3] URL for trade relations [4] URL for general information about the Tariff Loyalty Act [5] URL for the draft of the Tariff Loyalty Act
- The enactment of the Tariff Loyalty Act in EC countries could foster a more level playing field within the business sector, specifically in vocational training industries, as it encourages compliance with collective wage agreements and social protection rights, potentially increasing the quality and attractiveness of vocational training programs.
- On the economic front, the successful implementation of the Tariff Loyality Act in Saxony could indirectly impact politics and general-news sectors, as increases in the financial resources available for social insurance and taxes might lead to improvements in public services and infrastructure, and potentially influence the public's perception of the government's commitment to supporting workers' rights and equitable distribution of wealth.
