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The European Connection - Tony Richman

Mar 16, 2015
German minimum wage challenging the EU?

The new German law (from 01.01.2015) on minimum wage is set to put EU ideologies to the test.

The minimum wage concept is nothing new and national laws to this effect already exist in many European countries. However, the radical and unexpected German approach brings an acute challenge to the fundamental principle of free movement of goods within the EU. For the transport sector, the German minimum wage not only applies to workers employed in Germany, but for all workers travelling to or from Germany or carrying out cabotage in Germany!

Following vigorous lobbying and opposition from other EU countries, in particular by Poland, Germany has temporarily hit the brakes on applying its new minimum wage to foreign lorry drivers/staff transiting the country. This was announced following a meeting in Berlin on Friday morning 30 January 2015. The suspension will continue until European rules on the issue have been clarified. (A decision is expected by summer 2015.)

However, the suspension only applies for transit journeys! Foreign staff making deliveries to or from Germany or engaging in cabotage are still included in the law.

Applying the requirements to persons not actually ‘employed’ in Germany is highly unorthodox and fraught with practical problems. The new rules place the German administrative and bureaucratic burden on to thousands of carriers.

A plethora of forms, special clauses and burdensome registrations via the German authorities, have to be put in place between parties to avoid future disputes. No one disputes that the Germans are within their rights to introduce a minimum wage on their own labour. But when it comes to carriers who are established in other countries, travelling in the Single European Market on international transport, surely it is not German law but EU decisions that are needed concerning any common minimum level of wages and employment?

Are we heading towards the possibility of Germany setting precedents for the other 27 EU countries? If so, we could ultimately see the ridiculous situation of staff being subject to five or six different contracts to transport a consignment from northern to southern Europe. Apart from a bureaucratic nightmare, such a situation would surely bid farewell to the basic principle of free movement of goods in the internal market.

Many will sympathise towards the German actions, highlighting the need for clear EU rules in relation to international road transport where, reportedly, the balance of trade and employment is skewed in favour of inexpensive Eastern Europeans. But, surely we must find alternatives to a wall of bureaucracy and forms?

What’s certain is that this new practice introduces a serious challenge for the internal market. The European Commission needs to assess the possible alternatives to a crumbling ideology of freedom of movement and to address the possibilities concerning the future introduction of ‘German-type rules’ in other European countries.

Meanwhile, one of my colleagues perhaps put it more succinctly, saying “a right load of bureaucratic bunkum, more jobs to support and money into the coffers”.

Photo: Tony Richman

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