German Chancellor Angela Merkel is arguably the world’s foremost example of women’s empowerment: an accomplished scientist turned national leader and one of the most powerful people (not just women) in the world. Notwithstanding Merkel’s achievements and those of other women leaders in German politics, the country lags behind its European peers in closing the gender pay gap. Germany’s pay gap stands at 21.5 percent, according to EU data: the third largest in Europe and well above the EU average of 16.2 percent.
A new law that went into effect in January is meant to help close that gap by allowing employees to request information about wage disparities from their employers, but as Carolynn Look and Elisabeth Behrmann pointed out in a recent Bloomberg feature, the law puts the onus on employees to ask, whereas other legislative efforts, like the UK’s mandatory pay gap reporting and similar laws being considered in France, compel employers to provide this information up front.
A major component of the challenge for Germany is cultural: The term Frauenberuf (women’s job) is still used to describe occupations like nursing, housekeeping, child care, and social work—jobs that are often low-paying, part-time, and lack clear pathways to career advancement, Look and Behrmann note:
Even in fields dominated by women, such as medical assistants, men can get paid 40 percent more. The lower pay, along with more part-time work for women, mean they earn about 50 percent less over their working lives than male peers, according to a 2017 study by the German Institute for Economic Research in Berlin.
Goldman Sachs has put more than a dozen of its London-based bankers, salespeople, and traders on notice that their roles will be relocated to Frankfurt in the coming months, Reuters reports, amid uncertainty over the ability of banks to conduct continental European business from the UK after it leaves the EU:
After months of patience and private lobbying, the U.S. investment bank has decided it can no longer wait for clarity from lawmakers on how its business might be impacted by Britain’s exit from the trading bloc and is taking the steps to minimize disruption to clients.
It has informed members of its London-based derivatives and debt capital markets teams working on German accounts that their activities will be relocated to its base in Frankfurt and to make the necessary preparations to move to those offices by end-June, the sources told Reuters.
A source tells Financial News that these transfers are part of a broader strategy to move staff closer to their clients and not part of Goldman’s Brexit contingency planning. However, the report comes just days after UK Prime Minister Theresa May that the divorce agreement would not retain the existing arrangement of “passporting” rights that allow financial firms to sell their services across the EU upon being licensed to do so in just one member country. The financial sector and industry groups have lobbied the government to maintain the passporting agreement, but May said Britain would not become a “rule taker” deferring to the authority of Brussels and would instead seek “a new relationship on financial services based on this concept of mutual recognition.”
A new union deal in Germany covering some 120,000 Volkswagen workers will give some of them the option of swapping some of their pay for additional time off, CNN Money reports:
Volkswagen said the workers will get a 4.3% pay rise starting in May, and from 2019 an extra 2.3% bonus and more pension benefits. Night shift workers, and those caring for children and elderly relatives, can swap the new bonus for six extra days off. If they do, they’ll be entitled to about 45 paid days off each year, including public holidays.
Volkswagen Group — which also owns the Audi and Porsche brands — employs about 286,000 workers in Germany and 350,000 in other countries. German workers are taking advantage of low unemployment and strong economic growth to flex their muscles at the negotiating table.
The deal between Volkswagen and the IG Metall labor union comes after the first strikes the company had seen since 2004, Reuters adds, and represents a compromise between the union’s demands for a 6 percent raise and the company’s initial offer of 3.5 percent initially and a further 2 percent over 30 months. It also includes a significant boost in the amount of money Volkswagen contributes to employees’ pensions, from 27 euros a month to 90, and then to 98 euros starting in 2020. In exchange for these concessions, Volkswagen secured the right to ask five to ten percent of the workers covered in the agreement to temporarily increase their working hours from 35 to 40 a week.
Frankfurt (ESB Professional/Shutterstock)
Nearly five months after being elected to a fourth term last September, German Chancellor Angela Merkel and her Christian Democratic party finally reached a deal earlier this month to form a government with their traditional rivals, the Social Democrats. One of Merkel’s policy goals in her final term in office is to modernize Germany’s very strict employment laws, which haven’t been substantially updated in a century. Currently, the law states that workers cannot be forced to work longer than eight hours in a day and that they get a 30-minute break at least every six hours, in addition to 11 hours of off time between shifts, but there are no provisions for freelancers or to accommodate the flexible work schedules that are becoming more common in the 21st-century economy.
Merkel’s policy advisors want to shift the maximum hours timeframe to one week instead of one day, thereby abandoning the eight-hour cap on the workday, and cut the mandatory break between shifts to nine hours. Germany’s influential labor unions, one of which recently secured its members the right to a 28-hour workweek, oppose these proposed reforms, which they fear will weaken the protections German employees currently enjoy.
In one case, however, weakening those protections is precisely the point. The coalition agreement inked this month includes an outline for loosening job security guarantees for highly paid employees at banks, the Financial Times reports. The plan is intended to make Frankfurt, the main financial hub for both Germany and continental Europe writ large, more competitive with London and New York, particularly as international banks prepare to shift their EU operations out of the UK after Brexit.
After a series of strikes last week, the influential German union IG Metall sealed a deal with employers in which its members gained both an increase in pay and the right to a substantially shorter workweek, the Local reported on Tuesday:
Both the union and employers said in overnight statements they had reached a “tolerable compromise” with some “painful elements” covering 900,000 workers in key industrial state Baden-Wuerttemberg, which could be extended to the 3.9 million workers in the sector across the country. The key concession is the right for more senior employees to cut their working week to 28 hours for a limited period of six to 24 months.
The union had pushed for staff to have a right to more flexible working conditions around key life moments such as the birth of a child, looking after a relative or ill health — with the right to return to full-time hours afterwards. But bosses rejected unions’ demand that they continue paying full-time salaries to some of those who choose a limited period of reduced working hours. Meanwhile, employers also gained more flexibility, to increase willing workers’ weeks to 40 hours from the standard 35.
The agreement will also see the metalworkers’ pay increase by 4.3 percent, in addition to some one-off payments, in a compromise from their original demand of a 6 percent raise. Stefan Wolf, head of regional employers’ federation Südwestmetall, said that the compromise was “reasonably balanced” but said the deal would be “difficult to bear” for some firms.
Over the past decade, the German economy has developed a reputation as one of the most successful in Europe and has garnered widespread praise for its apprenticeship initiatives, approach to automation, low unemployment, and for avoiding stumbling blocks such as the European sovereign debt crisis. As business confidence continues to soar, Chancellor Angela Merkel is working to help the country modernize its labor laws, which were last updated in 1918.
Current German law stipulates that workers cannot be forced to work longer than eight hours in a day and that they get a 30-minute break at least every six hours, in addition to 11 hours of off time between shifts. But global trends are shifting away from the concept of the 9-to-5 workday. With more flexible or remote arrangements and continuous connectivity, these century-old laws don’t do a great job of accommodating modern workers. For example, there’s nothing in them for freelancers, who require a different set of protections. Or if a salaried knowledge worker wanted to work four 10-hour days instead of five eight-hour days, current laws would not seem to allow it. Additionally, if a manager is contacting an employee at all hours of the day outside of the office to complete work, there is no specific protection against that.
In order to allow for such flexibility and continue to protect workers’ rights in today’s rapidly evolving labor market, the laws in place need to change. German policy advisors have recommended changing the maximum hours timeframe to one week instead of one day, thereby abandoning the eight-hour cap on the workday, and reducing the mandatory break between shifts to nine hours from 11, according to the Washington Post‘s Ashley Nunes.
In its 2017 Young Workers Index, PwC surveyed the economies of the 35 OECD member countries, creating an indexed ranking of the countries’ expected productivity from younger workers. Switzerland, Iceland, and Germany, were the top three, while the US finished 12th and the UK landed in 18th: both moved up two spots from last year’s rankings.
Germany’s result is probably the most impressive given that it also has the fourth-highest GDP in the world. The US has the world’s largest GDP while the UK is fifth in the measure of economic productivity. France, which stands sixth in GDP, was ranked 29th in the Young Workers Index while Canada, with the world’s 10th-largest GDP, was ranked sixth.
The study also looked into the effects automation will have on job prospects for workers in this age cohort. It found that 39 percent of jobs for US workers aged 15-24 are at risk of being lost to automation, compared to 24 percent in Japan, 28 percent in the UK, and 38 percent in Germany.
One of the metrics tracked in the Young Workers Index, the NEET (not in education, employment or training) rate, is identified as a key metric for overcoming the risks of automation and driving growth. The study claims that if all 35 of the OECD countries lowered their NEET to that of Germany (9.3 percent), it would lead to $1.2 trillion in GDP growth. For the United States, it predicts a $428 billion, or 2.2 percent, rise in GDP by lowering NEET from 15.8 percent down to Germany’s level.