Employment and Social Affairs
Employment under the mandatory social security scheme by economic sector
*For reasons of data protection and statistical confidentiality, numerical values of 1 or 2 and data from which such numerical values can be mathematically deduced are made anonymous..
The role of legislation
In principle, German legislation regulates a uniform (minimum) level of protection for employees (e. g., working hours, holidays, protection against dismissal, protective rights for young people, pregnant women and severely disabled persons, as well as safety and health at work, etc.). Above this level of protection and within the framework of their collective bargaining autonomy guaranteed by § 9(3) of the German Basic Law, the social partners are free to regulate working conditions independently for the particular company or the respective sector.
Statutory social insurance provides protection against life risks such as unemployment, illness, need for care, accidents and occupational diseases, as well as cover for old age. Employees subject to social insurance are covered by social insurance; self-employed workers are partially included in this form of protection. Social insurance benefits are mainly financed by equal contributions from employees and employers. One exception to this, however, is legal accident insurance, which is financed exclusively by the employer. Tax revenue is also used for financing in some segments. The insurance providers thus formed are self-governing and guarantee the participation of the social partners.
The role and cooperation of the social partners
One of the main pillars of the social market economy in Germany is co-determination, i. e. the right of em- ployees and their representatives to participate in operational or business decisions. The scope and form of co-determination differ according to the company’s size, legal form and industry.
Corporate Co-Determination is most extensive in mining4 (Montan Co-Determination; MontanMitbestG [Coal and Steel Co-Determination Act5] MontanMitbestGErgG [Supplementary Co-Determination Act]6): In this case the supervisory boards are composed equally of shareholder and employee representatives. A labour director responsible for personnel and social matters is also appointed as an equal mem- ber of the management. Pursuant to the MontanMitbestG, his or her appointment is dependent on the approval of the majority of the employee representatives on the supervisory board.
For other companies which are managed in the legal form of a corporation and have more than 2,000 employees, the equal representation of employees and shareholders in the supervisory bodies also applies pursuant to the German Co-Determination Act (MitbestG). However, there are two major differences compared to co-determination in the coal and steel industries: In the event of a tied vote, the chairperson of the supervisory board, who is usually the shareholder, has the casting vote. This double voting right of the chairperson de facto invalidates the formal par- ity between workers and employers. Besides, the labour director can be appointed against the votes of the employee representatives on the supervisory board. For companies with 500 to 2,000 employees, the 1/3 participation of employee representatives on the supervisory board applies (DrittelbG7).
Company co-determinationis regulated in the Works Constitution Act, which states that an elected works council has participation rights in economic, personnel and social matters. In principle, a works council can be set up in every company in Germany with at least five employees. A central instrument in the works council work are company agreements, which – like collective agreements – are legally-binding agreements between the employer and the works council and regulate the employment relationship of the employees. Frequent topics are company regulations on working hours, data protection, health promotion, work safety and further training, all of which are tailored to the conditions prevailing in the company.
Freedom of association and the right to collective bargaining are guaranteed in Germany by German Basic Law, § 9 GG. Collective agreements are conclud- ed by one or more employers or employers’ associa- tions with one or more trade unions. They are solely binding for their members (tariff commitment). However, it is common practice for employers bound by collective agreements to allow non-unionised em- ployees to participate in the collective agreement by entering into an individual agreement that refers to the respective collective agreement. Many companies that are not bound by collective bargaining agreements also orient themselves on existing collective agreements. In 2014,8 30% of the extractive sector companies9 were bound by collective agreements; 27% by a regional collective agreement and 3% by a company collective agreement. However, the collective agreements apply to almost two-thirds (62%) of the employees in the sector, with 46% being subject to the conditions of a regional collective agreement and 16% to those of a company collective agreement.
Vocational training in Germany is essentially provided through the dual vocational training system, in which training takes place in parallel at two places of learning. The trainee concludes a training contract with the company and learns the necessary practical skills and competences at the workplace. The second pillar of the system is the vocational school, which provides general and job-related theoretical knowledge. The duration of the training depends on the profession in- volved and varies between 2 and 3.5 years. During this time, the trainee receives a training allowance from the company. The successful completion of the course qualifies the candidate to directly exercise his or her profession as a qualified specialist.
The industry trains personnel in a number of different professions, including e. g. mechatronics technicians, electronics technicians, industrial and process me- chanics, processing mechanics, mining and machine operators, mining technologists and industrial clerks. On the reporting date,12 there were 2,300 trainees among the employees of the extractive industry. This corresponds to a training rate of 3.7%, which was below the German average of 4.9%. A look at the individual sectors reveals a relatively differentiated picture for the extractive industry. For example, training rates in the quarried natural resources industry vary from below 1% to 7.4% (2018) because the importance of training occupations varies and the proportion of semi-skilled workers varies accordingly.
Gainful employment plays a central role both in social and individual terms. There is no doubt that work is seen as the main source of livelihood, and that earnings are the most important component of personal income for employees. The average gross monthly earnings of full-time employees in the industry were €4,081 per month in 2018, with an additional €464 per month in special payments.13 This means that av- erage monthly earnings in the extractive industry are at least 1% higher than the average in the manufacturing sector and at least 6% higher than the average earnings of full-time employees14 in Germany as a whole. Due to the deductible income tax and the proportionate social insurance contributions to be paid, the individual net wages of employees are significantly lower than the gross wages.
The principle of equality between men and women applies in Germany. This principle also applies to wage determination and it means that gender pay gaps in particular must be further reduced. The Act on the Promotion of Pay Transparency between Women and Men has been in force since 2017. This continues the principle of equal pay (equal pay for women and men for equal work and work of equal value) which is already standardised in the General Equal Treatment Act (AGG) and includes an individual right to information for employees, reporting obligations for large companies and the request to large private employers to carry out company audits of the pay structure. The average gross monthly earnings of women in the extractive industry was €4,315, which amounts to 92.6% of the male employees’ earnings (€4,662) and is thus above the average ratio of 83% in the manufacturing industry as a whole.
Diversity and equal opportunities
Different life experiences and work horizons of employees make a significant contribution to the eco- nomic success of companies. By consciously promoting diversity, companies can tap into an important success and competitive factor that has a positive impact on both companies and their workforces.
Diversity can be measured by a number of quantitative indicators, such as the proportion of women in all workforces and management, the proportion of foreign workers and the age structure of the workforce.
In 2018, the proportion of women among employees covered by social insurance in the sector was 13.1%. The proportion of foreign employees was 6.2% of the total staff.15
The proportion of female supervisory board members in the industry is very low at 10.7%. Only 4.4% of the board members of German extractive companies are women. Compared to other sectors, the extractive industry must act to increase the proportion of women in the workforce and in management positions. It should be noted here that the employment structure in the extractive industry has traditionally been characterised by male-dominated technical training occupations and courses of study.
At 63.3%, the 25 to under 55 age group represented by far the largest proportion of the workforce, followed by the 55 to under 65 group at 28.5%. 7.2% of the employees were in the under 25 group, while 1% were over 65.16
Equal opportunities are promoted in Germany by le- gal instruments such as the AGG, which states that “Discrimination on the grounds of race or ethnic origin, gender, religion, beliefs, disability, age or sexual identity must be prevented or […] eliminated”, 17 both in working life and in civil law.
Climate policy and structural change
The Federal Government has committed itself to implement the climate goals of the Paris Agreement. In support of this commitment, lignite production and coal-fired power generation in Germany are to be phased out by 2038 at the latest, in addition to the cessation of hard coal production in 2018. After the reunification of Germany in 1990, considerable changes in lignite mining took place in Eastern Germany, and the number of employees in the regions concerned was dramatically reduced in in the early 1990s.18 The German Government set up, amongst others, the Commission on Growth, Structural Change and Employment,19 which had the task to develop proposals for shaping the structural change resulting from the energy and climate policies and the decision to phase out coal mining. The objective of the commission was to maintain and create new, good jobs in the regions concerned that were covered by collective agreements, to ensure a secure and affordable supply of electricity and heat at all times, and to maintain and further develop the coal-mining areas into regions that would remain habitable and attractive.
Climate policy requirements, security of energy supply, and competitiveness were the subjects of the Commission’s comprehensive dialogue. The decisions on the use of coal for the generation of heat and power was confirmed by the German Parliament and the Bundesrat in July 2020 and resulted in the Act on the Reduction and Termination of Coal-fired Power Generation (Coal-fired Power Generation Termination Act, KVBG). This act was a social compromise.
Coal mining and coal-fired electricity generation are usually located in structurally-weaker regions, where they account for a considerable proportion of industrial value added. One industrial job creates around two more jobs in the region in the industry-related or service sector.
Opencast lignite mining has an impact on the economic, ecological and social structure of the communities directly affected by it and the communities on the edge of the opencast mines in the coalfields. The “polluter pays” (or “user pays”) principle applies to the use of infrastructures and property. The relocation and resettlement of villages must be arranged, carried out and paid for by the mining companies. Since the beginning of German lignite mining in the early 1920s, 120,000 people have been resettled.20 Even today, villages are being resettled to make room for open- cast mining. The owners of the affected land are compensated by the mining companies for the resettle- ment. The same applies to municipal property so that municipal facilities are rebuilt from scratch in agree
The compensatory payment amount is determined under private law between the parties directly affected. Only in the rare case of a necessary expropriation or cession of land, the compensatory payment amount is determined by the competent authority after a property valuation has been carried out by an expert. The amount of the compensatory payment is subject to judicial review. The expansion and adjustment of opencast mines depends on the agreements made for the termination of lignite mining. In this context, new infrastructure projects may be dispensed with.
The lignite mining regions21 are being supported by the Coal Mining Regions Structural Strengthening Act,22 that came into force on 14 August 2020. The new law offers the regions affected by the phase-out opportunities to remain on the path of economic success and to compensate the loss of employment caused by the termination of lignite mining (see also Legal framework). The law provides financial support in the amount of up to €40 billion by 2038, in particular for public investments by the Federal States and municipalities, but also for measures of the Federal Government, such as transport, broadband networks, real laboratories or the development of research facilities. The Federal Government has also set itself the goal of creating up to 5,000 jobs in federal authorities and other federal institutions in the coal regions.
Furthermore, the new, non-investment-oriented funding programme “STARK”23 is intended to support the economic, ecological and social transformation of the coal regions in a sustainable way. The programme can support personnel and operating costs of SMEs in particular, but only a small amount of investment.
To cushion the social consequences of the coal phase- out, the Federal Government has also introduced adaptation payments in line with the recommendations of the Structural Change, Growth, and Employment Commission. The adaptation payments gives older employees the opportunity to go into early retirement.