German Labor Reforms Create Greater Gap Between Rich and Poor

A small party was held last December to celebrate Sabine Rieckermann's anniversary in her job, but it hardly reduced her frustrations. "I've been working for the city for 25 years now, and I've been stuck in the same job for the last 16 years," Rieckermann says. "For me, there are practically no opportunities for advancement. I'm not getting ahead anymore."

Rieckermann, a member of the Ver.di union, has held many jobs for the northern city-state of Hamburg over the years, in both city agencies and schools. "I've learned a lot, I've continued to develop personally and professionally, and I've gained management experience," she says. "But, at some point, you just hit the ceiling. It's pretty bitter."

She has been in the sixth compensation group of the public-sector wage agreement for the German states since 1996. But the most recent Ver.di wage agreement only applies to employees of the federal government and municipalities. As the director of a school office, she is unable to enter a higher pay group. "It makes no difference at all whether I'm doing a great job or getting poor evaluations," Rieckermann says. "My actual performance simply doesn't matter." She feels she has hit a dead end despite being relatively privileged, with a more or less secure job and a somewhat acceptable income. Millions of other employees would completely envy her situation.

But now there are about 1 million temporary workers in Germany, and they often do the same work as their full-time counterparts for significantly less pay. In many cases, they don't know where they'll be working in a week or whether they'll be able to keep their jobs if their employer doesn't have enough work for them.

The boom began with the statutory deregulation of temporary work in 2003. Previously, highly prohibitive legal restrictions made a mass scale temp industry next to impossible. Since then, the number of temporary workers has almost tripled, from a little over 300,000 to more than 900,000. Earnings are low, even though there is now a minimum wage in the industry. In 2010, normal full-time employees who are required to make social insurance contributions earned an average gross monthly salary of €2,700, as compared with only about €1,400 for temporary workers.

"Temporary work is the most visible sign of the brutalization of conventions in the labor market," says Detlef Wetzel, the second chairman of union IG Metall.

But temp workers are only part of the low-wage sector. According to think tank IAQ in Duisburg, about 8 million people in Germany now work for an hourly wage of less than €9.15, while 1.4 million receive less than €5 per hour.

Working More for Less

Since no one can live on incomes like these, many workers have to rely on public assistance to supplement their earnings. Many are also part-time employees, but some 329,000 people with full-time jobs are still unable to make ends meet. Jens Vandrei is one of them.

After almost six years of work and several promotions, he is back where he came from. "At the club," says the 43-year-old, referring to his local job center, where unemployed Germans must go to collect their benefits and also search for new work.

Vandrei was receiving welfare benefits under the Hartz IV program for the long-term unemployed when, in June 2006, he was placed at a high school in Hamburg in a so-called one-euro job, which paid him that hourly amount while allowing him to keep receiving regular welfare payments. He worked as a handyman, and he was good at it. The school kept increasing his hours until he was offered a part-time position and then a full-time one. Nevertheless, he kept receiving Hartz IV benefits.

Vandrei's is actually a success story, given that he was out of the work force for years before being placed at the school. But Vandrei and his family -- which includes his wife, their three children and her son from a previous relationship -- can't live on his gross monthly income of about €2,000.

In late February, Vandrei returned to the "club" to file an application for supplementary Hartz IV benefits. "The €217 end-of-year adjustment in the electricity bill knocked us off our feet," he says, adding that he goes to work every day a "nervous wreck" with money troubles on his mind. He and his wife wear second-hand clothing they get from relatives and acquaintances, but finding clothes for their growing children is naturally a bigger problem.

When Vandrei, a union member, switched to a full-time job two years ago, his situation didn't get any better. On the contrary, he says, "I had twice as much work but less money." Since he was working full-time, he was no longer eligible for the supplementary Hartz IV assistance through the job center, and since he was earning more money, the day care fees for his children increased. On balance, his monthly income dropped by €25. "There is something wrong with our system," Vandrei says.