A new calculation by the German Confederation of Trade Unions (DGB) reveals a significant annual economic impact stemming from non-compliance with collective bargaining agreements and wage dumping. The DGB estimates the total damage to social security systems and income tax revenue, coupled with reduced purchasing power for workers, amounts to €123 billion annually.
The calculation, based on data from the Federal Statistical Office’s wage surveys, details that employees covered by collective bargaining agreements consistently earn an average of €2,891 net more per year compared to their counterparts who are not. This disparity has important ramifications for the overall purchasing power of the working population. The DGB suggests that widespread collective bargaining could inject approximately €58 billion more annually into the pockets of workers.
The figures, reported by newspapers within the “Redaktionsnetzwerk Deutschland” highlight €41 billion in losses for social security systems each year and €24 billion in lost income tax revenue for the federal government and states.
While the current estimate represents a slight decrease from the €130 billion calculated in 2023, the DGB attributes the decline to a modest increase in collective bargaining coverage in several federal states.
“Collective bargaining agreements are not just a tool for fair wages, they are a societal investment in stability and social security” noted DGB board member Stefan Körzell. “A high level of collective bargaining is not a hindrance, but an engine for economic growth – it strengthens domestic demand and secures good, sustainable jobs.
Körzell is calling on the federal government to commission infrastructure projects-currently slated to see substantial investment-only to companies adhering to collective bargaining agreements. He urged swift passage of the Tariftreuegesetz (Collective Bargaining Compliance Act) currently being drafted by the federal cabinet, while also suggesting improvements to the legislation. He stated that the current threshold of €50,000, which triggers the law’s application, is too high.
Furthermore, Körzell questioned the exclusion of security agencies from the Tariftreuepflicht (collective bargaining compliance obligation), arguing that public funds should not be used to subsidize wage dumping. “The state is a powerful purchaser – and therefore bears responsibility for fair competition that is not conducted at the expense of employees” he concluded.