Wages increase, optimism wanes

26th of January 2023 Article by Katja Scholz
Wages increase, optimism wanes

The business survey towards the end of last year indicates a less optimisic mood in Germany, reports Katja Scholz.

The Union of Construction Workers (IG BAU) and the National Association of Contract Cleaners (BIV) entered into a new collective wage agreement of their own accord in June. Wage rates in Group 1 (entry level wage) rose to €13 on October 1 - a rise of 12.55 per cent. There was another rise on January 1 2024 to €13.50.  In Group 6, for glass and façade cleaners, wages increased on October 1 by just under nine per cent to €16.20. There will also be a further increase here in the new year to €16.70.

The stimulus for the new collective agreement was the new legal minimum wage in Germany which also rose on October 1 to €12 Euro. “The clear gap between the new agreement and the national minimum wage will continue to be maintained in the future,” said BIV guild master Thomas Dietrich. “This is the key message of our new collective agreement, in the light of the increasing labour shortage.”  Wage rates in the German contract cleaning sector have consistently been above national minimum wage since 2015.

The Federal Ministry of Employment and Social Affairs has declared the two sector minimum wages universally binding, by statutory regulation under the Employee Posting Act (AEntG - the law on mandatory working conditions for workers posted across borders and for workers regularly employed in Germany). This means both sector minimum wages apply nationwide and without exception to companies not bound by collective bargaining agreements and to hourly-paid workers. Germany’s biggest skilled trades employer has been subject to the Employee Posting Act since 2007. This ensures a level playing field for firms and employees in the labour-intensive service sector.

With all the good news, there is also less optimistic feedback to report. The current BIV autumn survey reveals evidence of a distinctly gloomy mood. More than 430 BIV member companies took part. The economic fallout of the Russian war in Ukraine, as well as the global shortage of materials and supply chain bottlenecks caused by the pandemic - along with rising inflation - have resulted in a cautious mood among companies in the contract cleaning sector.

As a result, revenue projections for 2022 are significantly more cautious than in the spring survey: 38.5 per cent predict declining sales in contrast to 21.3 per cent in the spring survey. The prognosis for 2023 is set to be even more cautious:  38.8 per cent of companies forecast a decline In sales while 33 per cent expect sales to stagnate. Only 28.2 per cent are looking forward to an upturn in sales in the coming year.

The survey also clearly shows that rocketing prices in many areas represent the greatest burden.  Whether it’s workwear, cleaning machines, chemical products, refuse bags or hygiene products – cost increases averaging between 10 and 30 per cent have been felt across all areas in recent months. Firms are also finding the further rise in energy costs very onerous.

Not new, but no less urgent, is the matter of staff shortages which has also re-emerged from the current survey as extremely important and equally burdensome.  Almost 92 per cent of companies state they are desperately trying to recruit more staff and are able to offer them immediate employment.

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