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The Public Sector Pay System & Public Procurement. National Report (Germany) Duisburg, 22th/23th March 2012 team IAQ Prof. Dr. Gerhard Bosch / Leila Meisaros / Gabi Schilling / Dr. Claudia Weinkopf. Outline . Public sector adjustments in Germany Composition of public sector employment

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the public sector pay system public procurement

The Public Sector Pay System & Public Procurement

National Report (Germany)

Duisburg, 22th/23th March 2012

team IAQ

Prof. Dr. Gerhard Bosch / Leila Meisaros / Gabi Schilling / Dr. Claudia Weinkopf

outline
Outline
  • Public sector adjustments in Germany
  • Composition of public sector employment
  • Industrial relations and social partners – old and new model of codetermination
  • Major reform of the Collective Agreement for the public service in 2005
  • Wages and pensions: Public / private sector
  • Public procurement and prevailing wage laws

PROCURE 22th March 2012

public sector adjustments in germany
Public sector adjustments in Germany
  • German „jobmiracle“ - Noadjustments in and after thefinancialcrisis
  • Adjustments (reductionofemployees, payfreezesandcuts etc. graduallyoverthe last 20 years
  • Today German publicsectorcomparativelysmall (employment in government 9.6%)
  • Drivers foradjustmentsandthe „decadeofdenationalisation“
    • Unification
    • Privatizationandoutsourcing
    • Tax cuts
  • Nowpartiallyrepairsofthispolicy: prevailing wage lawsandre-nationalisationofpublicutitilities
  • Future adjustments: Debtbrake

PROCURE 22th March 2012

debt brake a model for europe
Debt brake – A model for Europe?
  • 2009 amendment of constitution: debt brake requires federal government to eliminate its structural deficit by 2016
  • Structural new debt to be capped at 0.35 per cent of GDP until 2016
  • Exceptions in the event of specific emergencies and if economy is weak. Deficits should then be offset with surpluses during upswings
  • from 2020 the Länder no longer allowed to run structural fiscal deficits at all
  • Substantial difficulties to measure potential domestic product: Variations between 27,6 and 43,5 Billion € for 2016

PROCURE 22th March 2012

composition of public sector employment
Composition of public sector employment
  • Civilservants in Germany not only in coreservices
  • Civilservants: lifelongemployment, nomination - noworkcontract, norightostrike, principleofalimentationforpayandpensions, nocontributionstosocialinsurances
  • Federal Court 2/2012: Cut ofentrywagesforprofessorsunlawful
  • Staffreductionssince 1991 by 32,4%, mostreductionsbefore2000
  • Most staffreductionsfell upon non civilservants: cheaper in theshortrun

PROCURE 22th March 2012

slide6
Development of the employment in the public service (civil servants and non-civil servants) 1991 – 2010 in 1,000)

*Post, Railways, joint authorities

Source: Destatis 2011: 100; own calculations

PROCURE 22th March 2012

changes in public sector employment in the last two decades in 1 000 1991 2010
Changes in public sector employment* in the last two decades (in 1,000), 1991-2010

* Exclusive post, railway; Source: BMI – Ministry of inner affairs, 2011: 10 (translated)

PROCURE 22th March 2012

employment in government as a of the labor force 2008
Employment in government as a % of the labor force (2008)

Source: OECD 2011a: 103.

PROCURE 22th March 2012

number of civil servants and non civil servants by skill level and share of women in 2010
Number of civil servants and non-civil servants by skill level and share of women in % 2010

Source: Destatis 2011, own calculations

PROCURE 22th March 2012

share number of temporary employees in the public service by sex and of total employment 2002 2010
Share (number) of temporary employees in the public service by sex and of total employment 2002 - 2010

* 15 – 65 years, without apprentices and students

Source: Destatis 2010.

PROCURE 22th March 2012

industrial relations and social partners old model until 2004
Industrial Relations and social partners – old model (until 2004)
  • Characteristics:
    • Private sectorsetsthepatternforthepublicsector
    • High coordinationandpatternagreement also forcivilservants, stateownedcompaniesandcharityorganizations
    • Formal consultationwithcivilservantsatfederallevel
    • Codetermination: National andstatelaws on „Personalvertretung“ - kindofworkscouncilswithlessrights

PROCURE 22th March 2012

industrial relations new model of codetermination
Industrial Relations: New Model of codetermination
    • Decoupling from agreements in the private sector
  • But negotiated fragmentation: Coverage still 98%
  • Plurality of agreements - with opening clauses for Länder
  • Increasing differentiation of salaries, reduced Christmas bonus and (increased) weekly working hours
  • No allowances for children and married partners

PROCURE 22th March 2012

major reform of the collective agreement for the public service in 2005
Major reform of the Collective Agreement for the public service in 2005
  • What‘snew?
  • Introductionoflowpay grades
  • Performance relatedpay
  • Abolition ofseniorityprinciple
  • Joint wage gridforblueandwhitecollarworkers
  • Effect
  • All in all lowerwagescomparedto
  • formercollective Agreement (BAT) and
  • private sector (in qualifiedjobs)

PROCURE 22th March 2012

wages and pensions public private sector
Wages and pensions – Public / private sector
  • Lower increases of agreed wages in public sector between 2000 and 2010
  • Average gross earnings per year slightly lower for men and slightly higher for women
  • Gender gap lower in public sector (for full-time and earnings per year 17,8% vs. 21,4% in private sector)
  • Wages are higher for low skilled, for East-Germany up to higher deciles, for West-German women up to higher deciles and for West-German men in the lower deciles
  • Pensions are substantially higher (civil servants one-tier system, occcupational pensions for non-civil servants)

PROCURE 22th March 2012

comparison of wage differences old new collective agreement 0 bat level
Comparison of wage differences – old / new collective agreement (0 = BAT-Level)

Source: own calculation

PROCURE 22th March 2012

collectively agreed wages in different german industries 2000 2010 in west germany 2000 100
Collectively agreed wages in different German industries 2000 – 2010 in West-Germany (2000=100)

128,9 Chemical industry

128,3 Metalindustry

124,4 Banks

123,6 Total

120,5 Construction

118,7 Retail trade

116,9 Public service*

*from 2005 Federal States

Source: WSI-Tarifarchiv (Tarifpolitischer Jahresbericht 2010) Stand: 31.12.2010

PROCURE 22th March 2012

slide17
Gross earnings per hour, month, and year of men and women in the private and public sector* full-time (part-time) 2010

*only non-civil servants, non-market services (includes charity organizations)

Source: Statistisches Bundesamt , Fachserie 16, Reihe 2.3

PROCURE 22th March 2012

slide18
Income sources and coverage of the 65+ years old population, West-Germany 2007, civil servants and non-civil servants

Source: http://www.sozialpolitik-aktuell.de/tl_files/sozialpolitik-aktuell/_Politikfelder/Alter-Rente/Datensammlung/PDF-Dateien/abbVIII55a.pdf

PROCURE 22th March 2012

public procurement and prevailing wage laws
Public procurement and prevailing wage laws
  • Value ofservicesandgoodsboughtbythestateabove OECD average
  • Untilmid 90‘s - statemodelemployeralso payingagreedratesforoutsourcedservices
  • Sincethenstatemajordriver in expansionoflowwages – decisionsof30,000 procurementbodiesmainly on lowestprice
  • Since 1999 introductionofprevailing wage laws in states
  • First generationonly on construction, Länder levelandlocalwages, now on all services, municipalitiesandwithminimumwages
  • Level ofminimumwagescorrepondstothelowestpublicsectorwages (stateshouldunderbiditself)

PROCURE 22th March 2012

process of public procurement in germany
Process of Public Procurement in Germany

Source: Willenbruch/Aydintan 2010: 3, own illustration

PROCURE 22th March 2012

thresholds for public procurement europ law
Thresholds for public procurement (Europ. Law)

Revised thresholds from 1 January 2012 : Work contracts € 5,000,000. supply contracts € 130,000 or € 200,000 and € 400,000 for entities operating in water, energy, transport etc.

PROCURE 22th March 2012

prevailing wage laws for public procurement
Prevailing wage laws for public procurement

О Federal states with prevailing wage laws

О Federal states preparing prevailing wage laws

О Federal states without prevailing wage laws

Minimum wage available or planned

PROCURE 22th March 2012