East German Employers Issue Warnings Regarding the Potential Impacts of the Tariff Loyalty Act - Employers in the East are sounding alarms about the potential negative impacts of the recently approved collective bargaining law
Criticism Mounts Against Tariff Loyalty Act in Eastern Germany
The proposed Tariff Loyalty Act (BTTG) has sparked intense debate in Eastern Germany, with employer and economic associations from Saxony, Saxony-Anhalt, and Thuringia collectively expressing their concerns. The associations argue that the Act interferes with collective bargaining autonomy and poses a significant threat to economic development in the region.
The Association of Employer and Economic Associations in Saxony-Anhalt (AWSA), based in Magdeburg, has been particularly vocal in its criticism. Marco Langhof, the president of AWSA, called the Act a "frontal attack on collective bargaining autonomy" and an "economic policy bankruptcy."
The Act is particularly disadvantageous to medium-sized companies in Eastern Germany, as many of these businesses rely extensively on exporting goods to the U.S. and Europe. The high tariffs, which may reach up to 30%, increase costs, reduce competitiveness, and create uncertainty, squeezing profit margins and discouraging investment or expansion plans.
The Act requires companies to adhere to collective bargaining working conditions for federal contracts over 50,000 euros. Non-compliance may result in penalties. Critics argue that this requirement places an undue burden on businesses, particularly medium-sized ones, and may lead to job losses and stunted economic growth.
The associations have written to Federal Chancellor Friedrich Merz, Jens Spahn, and the ministers of the three eastern German states, stating that the principle of collective bargaining autonomy is constitutionally protected. They have urged the federal government to withdraw the draft of the Tariff Loyalty Act and uphold this fundamental right.
Hartmut Koch, president of the Association of Thuringian Economy (VWT), based in Erfurt, also expressed his concerns about the low collective bargaining coverage in the region: 16 percent in Saxony, 18 percent in Thuringia, and 22 percent in Saxony-Anhalt. Koch, who is also the chairperson of the SPD in Thuringia, Barbara Bas, has emphasized the need for fair competition and real social responsibility, treating all performance-capable companies equally, regardless of their collective bargaining status.
As the cabinet prepares to decide on the Tariff Loyalty Act on Wednesday, the debate continues. Those who support the Act argue that it will help protect workers and ensure fair wages, while critics maintain that it will stifle economic growth and job creation in Eastern Germany. The outcome of this decision could have far-reaching implications for the region's economy and its businesses.
[1] German news source 1 [2] German news source 2 [3] German news source 3 [4] German news source 4
- In the midst of the intense debate over the Tariff Loyalty Act, there is a growing call for alternative solutions that prioritize community aid, vocational training, and economic development, particularly in the face of politics stymieing policy-and-legislation.
- As the general news coverage on the Tariff Loyalty Act continues, there is a mounting interest in exploring vocational training programs as a means to bolster competitiveness among medium-sized companies, reduce unemployment, and encourage investment and expansion, beyond the polarizing debates of politics.
