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March 1996, Volume 3, Number 3

Germany: Bosnians and Jobs

The interior ministers of Germany's 16 states met January 26, 1996 and agreed to begin to return the 320,000 Bosnians in Germany to Bosnia on July 1, 1996. Bosnians without families in Germany are expected to leave by June 30, 1997; other Bosnians are expected to be out of Germany by August 31, 1997. Most of the 70,000 Croatians who fled to Germany have returned.

Under German law, the 16 interior ministers have considerable discretion in arranging for the return of Bosnians.

There were 12,050 asylum applications in Germany in January 1996, including 2,400 each from the ex-Yugoslavia and Turkey. Germany changed its asylum law and procedures on July 1, 1993, and the number of foreigners applying for asylum in Germany was about 127,000 in 1994 and 1995, down sharply from 322, 599 in 1993 and 430,191 in 1992.

The chairman of the opposition Social Democrat (SPD), Oskar Lafontaine, was criticized by the ruling government parties for suggesting in the run-up to state elections in Baden-Wuerttemberg, Rhineland-Palatinate, and Schleswig-Holstein on March 26 that ethnic Germans were overburdening the German job market and welfare system. According to Lafontaine, "A million people have come as job-seekers and it's about time to stop this influx, otherwise we'll have 100,000 more unemployed at the end of the year."

About two million ethnic Germans have emigrated from the former East Bloc to Germany since 1989, and four million ethnic Germans still live in eastern Europe and the former Soviet Union. In 1995, some 217,898 ethnic Germans arrived in Germany, down from 222,591 in 1994. Some 100,000 Germans in eastern Europe have valid immigration documents that would permit them to move to Germany.

The German Parliament on February 9 approved laws aimed at reducing the number of foreign workers on German construction sites. The new laws will enforce minimum wage and social security payments for all employees effective March 1, 1996. Companies found violating the new law could be blacklisted from public works contracts.

Some construction supervisors predict that the new law will force thousands of foreign construction workers into the black economy--one German employer noted that the total costs of hiring an illegal foreign worker can be as little as 5 DM per hour, versus 60 DM to 80 DM per hour for a German. On February 14, 1996, German authorities inspected a major construction site in Berlin, taking away some of the foreign workers for questioning, and promising more raids.

At most construction sites, the foreman is German, the skilled workers are British and Irish, the hod-carriers are Portuguese, and the laborers are Poles.

European Union officials believe that there is enough support, despite British opposition, to pass an EU law ensuring that EU workers seeking employment in other EU nations receive the same pay and conditions as local employees as of the first day they are employed abroad. The four year old proposal is getting a new look because of complaints of "social dumping" in German construction.

Under the EU's freedom of services proviso, the company leasing the low-cost workers is providing a cross-border service to the firm that actually employs the worker. France, the Benelux, and now Germany have national laws that require such "seconded" workers to be paid at least the local minimum wage from their first day of work--some EU countries want a one to three month period during which workers from other EU nations can be paid less.

Under EU voting procedures, Britain must have the support of two other large countries to veto the proposed regulations.

On January 30, 1996, Germany announced a 50-point plan to stimulate investment and create jobs. Germany in January 1996 had 35 million employed and 4.2 million unemployed workers--10.8 percent of the labor force was jobless, and one-fourth of those without jobs are 55 or older. To persuade long-term unemployed workers to accept jobs, assistance payments will be reduced for each year of joblessness.

Many companies reportedly lay off older workers so that they can push the cost of older workers onto the government--laying off a worker over 55 costs the German unemployment/welfare systems an average $150,000, of which the employer pays less than 10 percent. German workers are eligible to draw state pensions at age 58.

There is a great deal of debate over how to create jobs and reduce joblessness. One issue is termination. In the US, a worker who is permanently laid off when a plant shuts typically gets one week of severance pay for each year of employment--in Germany, the ratio is one month's pay for each year of employment, or four times more.

When a firm lays off 10 percent or more of its workers, the employer must work out a social plan with the plant's workers' council-- a group of elected workers--and an interest reconciliation, which means that a company closing a plant must try to sell the plant to another buyer to preserve jobs, or give the workers a chance to buy it.

According to some US companies operating in Germany, the cost of "bribing" workers to agree to job cuts discourages US and other foreign investment in Germany.

Many employers want Germany to permit five-year and other limited-term contracts, which would enable employers to dismiss workers after a fixed period without giving a reason or paying severance. Under German law, employers and workers can agree to one maximum 18 month contract--employers want 24 month contracts that could be renewed. About six percent of West Germany's workers, and 12 percent of the East's workers, are on fixed time contracts.

Most Germans reject labor market deregulation that, they argue, might create a class of so-called working poor residents in low-wage jobs.

There were 226,000 foreigner-owned businesses in Germany in 1993, almost double the number in 1988. Half of these foreigner-owned businesses were restaurants, and Turks owned about one in six foreign-owned businesses.

Some four million Germans are receiving social assistance--about one-third of them are long-term unemployed. Poverty in Germany is defined as an income of less than half the average income of all households.

Peter Bild, "Germany bans low-wage foreign builders," UPI, February 9, 1996. "Resurrection of Anti-Social Dumping Directive," European Insight, February 9, 1996. Imre Karacs, "British brickies face sack from German jobs," The Independent, February 10, 1996. John Palmer, "Auf Wiedersehen Pet Workers say Farewell, The Guardian, February 7, 1996. "Low paid workers price themselves out of a job," Daily Telegraph, February 7, 1996. "Pet, it's auf wiedersehen," Daily Telegraph, February 8, 1996. Peter Gumbel, "Job losses soar while Germans fumble real reform," Wall Street Journal, February 2, 1996.