Wage evasion: Massive consequences for the state and employees
According to a DGB analysis, the state is losing billions of euros in revenue due to employers' wage evasion. In total, the social security system in Germany would lose around 43 billion euros in contributions each year, while the federal, state and local governments would receive around 27 billion euros less in taxes. This is according to calculations by the German Trade Union Confederation (DGB) based on data from the Federal Statistical Office.
Collective bargaining evasion is the attempt by an employer to undermine a collective agreement and thus pay wages and salaries that are lower than those agreed in the collective agreement. According to the DGB, this also means fewer payments into the social security system - i.e. lower income from unemployment, pension and health insurance. Tax revenues from income tax are also lower.
Purchasing power suffers
According to the DGB, the lack of collective bargaining coverage also affects the purchasing power of the working population: With nationwide collective bargaining coverage, employees would have a total of around 60 billion euros more per year in their wallets. If you look at this across the whole of Germany and across all sectors, the bottom line is that employees who do not have a collective agreement would have 3022 euros less net per year than employees covered by collective agreements.
So while many employees are annoyed about salaries not being paid properly despite having a collective agreement, others can only dream of the security of such a collective agreement. The DGB criticized the fact that only around half of all employees currently benefit from collective agreements and their protection.
Demands of the DGB
"This trend is jeopardizing our prosperity, weakening democracy and costing us dearly," said DGB Chairwoman Yasmin Fahimi. "We will continue to put pressure on the political players in the federal states and the federal government to advocate for more collective bargaining coverage - including through new legal regulations. After all, the economic damage caused by employers' flight from collective bargaining over three decades is enormous. Politicians must no longer ignore this."
The union is calling for public contracts and subsidies to generally only be awarded to companies that apply collective agreements. There must also be better laws in the private sector to strengthen collective bargaining.
Tariffs on imported goods could exacerbate the financial struggles of businesses affected by wage evasion, as they would need to allocate more of their limited funds towards these additional costs. This could potentially lead to further reductions in wages and benefits for employees, further eroding their purchasing power.
To mitigate the financial impact of wage evasion, some employers might consider cutting back on non-essential insurance policies to save money. However, this could leave employees and their families vulnerably unprotected in the event of unexpected health issues or accidents.
Source: www.dpa.com
