A new analysis by the German Confederation of Trade Unions (DGB) calculates that non-compliance with collective bargaining agreements and wage dumping results in an annual economic loss of €123 billion. This figure encompasses €41 billion in losses for social security systems and €24 billion in income tax shortfalls for the federal government and states combined.
The study, based on data from the Federal Statistical Office’s earnings survey, reveals that employees covered by collective bargaining agreements earn an average of €2,891 more net annually compared to their counterparts without such agreements. This disparity significantly impacts the purchasing power of the working population. According to the DGB, widespread collective bargaining agreements could put an additional €58 billion annually in the pockets of employees.
The figure of €123 billion represents a slight decrease from a previous DGB calculation in 2023, which estimated a loss of €130 billion. The DGB attributes this reduction to a modest increase in collective bargaining coverage in some federal states.
“Collective bargaining agreements are not only an instrument for fair wages but also a collective investment in stability and social security” stated DGB board member Stefan Körzell. “High collective bargaining coverage is not a hindrance but a driver of economic growth – it strengthens domestic demand and secures good, sustainable jobs.
Körzell has urged the federal government to prioritize companies with collective bargaining agreements when awarding the forthcoming multi-billion euro infrastructure investments. He advocated for the swift passage of the proposed Collective Bargaining Loyalty Act by the Bundestag, while also calling for revisions, particularly regarding the €50,000 threshold, which he deems excessively high.
Furthermore, Körzell expressed concern over the exclusion of security authorities from the scope of the Collective Bargaining Loyalty Act. “Public funds must no longer subsidize wage dumping” he said. “The state is a powerful purchaser – and therefore bears responsibility for ensuring fair competition that is not played out on the backs of employees”.
