Business economist Martin Werding criticised the new federal Tariff Loyalty Act as ineffective. Speaking to the “Rheinische Post” on Friday, he said that collective wage autonomy and a company’s choice whether to join a collective bargaining agreement are key elements of our labour‑market and competitive framework. The Act is meant to strengthen collective wage autonomy by restricting that freedom, but in practice it delivers no benefit, Werding explained.
He added that, except for Bavaria and Saxony, every German state already has tariff‑loyalty regulations-varying in length and in the conditions required, such as thresholds based on the volume of public contracts to which the rules apply. Analyses by the German Economic Institute in Cologne, however, show no indication that these regulations have increased tariff binding or even slowed its steady decline.
Consequently, Werding warns that firms seeking public contracts will face additional bureaucracy, and that industries with low tariff binding will bear higher costs. As a member of the federal government’s Economic Advisory Council, he highlighted that these measures will not achieve their intended aims.