The German meat industry is being pushed off its low road of migrant-labour exploitation towards regulation and potential collective agreement.
For a long time, the meat industry in Germany has been heavily criticised for wage-dumping by its European neighbours, based largely on exploitation of migrant workers from eastern Europe. Numerous outbreaks of Covid-19 in German slaughterhouses once more focused public attention on the precarious conditions of these workers. Now Germany has adopted a new legal framework, including a ban on contract and temporary agency work, creating an opportunity for a more fundamental renewal of labour relations in the sector.
As a result of a business model based on low-cost production, over the past two decades the German meat industry was highly successful in expanding its international market shares. Amid this transformation from a domestic to a largely export-oriented sector, Germany also became highly attractive as a location for slaughter and meat production.
Labour costs in the industry have been significantly lower than in other major European meat-producing countries, such as France, Belgium, the Netherlands or Denmark (see bar chart). The contrast with Denmark—where annual labour costs per employee at €69,000 are more than double the German level—is especially stark. Labour costs in Belgium and the Netherlands are also more than 65 per cent above those in Germany, with France 50 per cent higher.
Annual labour costs in the meat sector per full-time equivalent employee (€000s, 2018)
The low-cost sectoral model in Germany goes hand-in-hand with specific labour relations. Organisation is rather weak and with low union density there are no industry-level collective agreements to set sector-wide employment standards. Most meat companies are not covered by any collective agreements and are bound only by legal minimum standards, such as the statutory minimum wage.
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Moreover, almost all the firms have made extensive use of contract workers (Werkvertragsarbeiter), hired by specialist service companies which often recruit directly in eastern Europe. Although no official figures are available, the evidence indicates that this applies to up to 90 per cent of workers employed in slaughterhouses and meat packaging. A two-tier employment model surrounds a small core of directly hired workers with the bulk of contract workers, hired by the subcontractors under much less favourable conditions.
Indeed, there is considerable evidence that employment practices in the German meat industry continue to breach fundamental legal requirements. A December 2019 report from the labour inspection of North Rhine-Westphalia, encapsulating the results of visits to 30 slaughterhouses (with 17,000 workers hired by 90 service companies), found fully 9,000 violations of the law. Serious issues were identified in 85 per cent of plants inspected.
Most infringements involved working time, such as excessive working hours of more than 16 hours a day and non-compliance with mandatory rest periods. A lot of unpaid overtime undermined the formally paid statutory minimum wage. The inspections also revealed a lack of occupational health-and-safety facilities, technical safety shortcomings and poor workplace-safety organisation. Finally, accommodation for the migrant workers was quite unsatisfactory and insecure, often rented to them by the subcontracting companies at unreasonable rates.
The past decade has seen several initiatives to improve working conditions in the German industry, ranging from the temporary setting of a sectoral minimum wage to a voluntary commitment by employers to improve conditions and finally, in 2017, legislation targeted at employee rights in the industry. None however brought about any meaningful improvement.
New legal framework
When several meat firms were affected by significant Covid-19 outbreaks last spring, in the public debate a direct link was made to the associated working and housing conditions. In reaction, the federal government immediately announced a new legal framework to promote more fundamental changes in the sector. The Occupational Safety and Health Inspection Act (Arbeitsschutzkontrollgesetz) was finally adopted in December 2020. It encompasses a comprehensive set of provisions, with many new regulations requiring amendments to existing legislation.
The most significant, in force already since January 1st and valid for all meat companies with 50 or more employees, is a ban on contract work in the core areas of production, such as slaughtering, cutting and boning—only regularly employed workers of the principal employer will be allowed to engage in these areas. The government deems this necessary to end the lack of transparency associated with the coexistence of different employment forms in one workplace and to establish clear lines of responsibility for working conditions.
Moreover, there will be a ban on temporary agency work in these sectors from April 1st, to prevent companies simply converting contract work to that alternative. During a three-year transition, firms will be able to use agency workers on a limited basis—but only if their conditions are determined by a collective agreement. The government is thus pressing the companies to start collective bargaining with the trade unions.
There are also provisions for the improvement and enforcement of working conditions. Among others, meat-producing firms must record electronically employees’ hours of work, to monitor compliance with minimum-wage legislation. Inspection will also be significantly stepped up, with a minimum inspection ratio of 5 per cent of workplaces per annum.
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The new legal framework is an important precondition of more fundamental improvement in working conditions. The ban on contract and temporary agency work and the overcoming of a two-tier workforce in the meat factories will also make it easier for trade unions to regain organisational strength at the workplace and to put pressure on the companies for better labour regulation.
On its own, however, the framework will not be sufficient to ensure decent conditions across the sector, as the companies are only obliged to provide the legal minimum requirements, such as the statutory minimum wage. A further vital step would be resumption of industry-level collective bargaining, to determine binding standards throughout the sector.
Given the intense competition in the industry, establishing decent working conditions requires a floor of industry-wide minimum standards, to prevent individual firms gaining a competitive advantage simply through low-cost production. To ensure better working and living conditions for the migrant workers, industry-level collective bargaining would have to encompass not only such minimum provisions but also—as in other industries—more comprehensive stipulations to ensure decent conditions for all employees, covering pay, working time, holidays and so on.
Such an agreement would offer a binding framework for competition in the industry and contribute to ending destructive price competition on the backs of the workforce. It would also represent an important step towards a much-needed change in the sector’s dominant business model and could indeed lead to an end to wage-dumping in the German meat industry.
Serife Erol is a research associate at the Institute of Economic and Social Research (WSI) at the Hans Böckler Stiftung and PhD candidate at the Ruhr-University Bochum. For her master's thesis she conducted qualitative research on working conditions and labour relations in the German meat sector. Thorsten Schulten is head of the collective-agreements archive of the WSI and an honorary professor at the University of Tübingen.