New Law Aims to Strengthen Collective Bargaining and Ensure Fair Wages in Public Procurement
2023-03-08
On January 8, 2025, the German Bundestag (lower house of parliament) passed a new law, known as the “Law on Strengthening Collective Bargaining through Securing Tariff Compliance in Public Procurement of the Federation (Tariftreuegesetz).” The law aims to promote fair wages and working conditions in the public sector by ensuring that companies bidding for government contracts comply with collective bargaining agreements.
Background
In recent years, there has been growing concern in Germany about the erosion of collective bargaining and the increasing use of low-wage subcontractors in public procurement. This has led to a decline in wages and working conditions for many workers, particularly in the construction and cleaning sectors.
Key Provisions of the Law
The new law introduces a number of key provisions to strengthen collective bargaining and ensure fair wages in public procurement:
- Obligation to comply with collective bargaining agreements: Companies bidding for government contracts must comply with the applicable collective bargaining agreements for the relevant industry and region.
- Proof of compliance: Companies must provide proof of their compliance with collective bargaining agreements, such as a certificate from a trade union.
- Sanctions for non-compliance: Companies that fail to comply with collective bargaining agreements may be excluded from bidding on government contracts or face other sanctions.
- Establishment of a monitoring system: A new monitoring system will be established to ensure compliance with the law.
Implications for Public Procurement
The new law will have a significant impact on public procurement in Germany. Companies that bid for government contracts will need to ensure that they comply with collective bargaining agreements. This may lead to increased costs for some companies, particularly those that currently pay below-market wages.
Support from Trade Unions and Employers
The new law has been welcomed by trade unions and employers’ associations. Trade unions believe that the law will help to protect workers’ wages and working conditions. Employers’ associations believe that the law will create a level playing field for all companies bidding on government contracts.
Conclusion
The new law on collective bargaining and tariff compliance in public procurement is a significant step towards ensuring fair wages and working conditions in the public sector. The law is expected to have a positive impact on workers’ wages and working conditions, while also creating a more level playing field for businesses bidding on government contracts.
20/14433: Unterrichtung Entwurf eines Gesetzes zur Stärkung der Tarifautonomie durch die Sicherung von Tariftreue bei der Vergabe öffentlicher Aufträge des Bundes (Tariftreuegesetz) – Drucksache 20/14345 – Stellungnahme des Bundesrates (PDF)
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