Low Compliance with Collective Agreements in the Business-related Services Sector

The formation of the ver.di trade union for the services' sector planned for this week gives rise to the question as to extent of the compliance with collective agreements in the services sector. In any case, it is far below the macroeconomic average in the business-related services sector. For instance, only about one third of the revenue in this sector is generated by businesses complying with collective agreements. This is the result of a representative survey among 1,100 business-related service providers carried out by the Centre for European Economic Research (ZEW) in Mannheim, in collaboration with the "Verband der Vereine Creditreform" in Neuss. The economic sector of business-related services encompasses tax advisors and certified public accountants, business consultants, architects, technical consultants and planners, vehicle renting, machine renting, cargo handling and logistic firms, software providers, advertising agencies and waste management firms.

One of the main reasons for the low level of compliance is the lack of collective bargain agreements in many industries of this sector. For example, 30 per cent of the revenue is generated by business-related service providers that claim that there are no collective agreements at all in their sectors. Another 37 per cent of business-related service providers do not comply with collective agreements, even though there is one. There are considerable differences between the individual industries regarding the application of collective agreements. Whereas in particular traditional industries such as cargo handling and logistic firms as well as waste management firms comply with collective agreements, only very few advertising agencies and vehicle renting firms pay according to collective bargain agreements. Payments according to collective agreements are least common among tax advisors and certified public accountants. The ver.di trade union for the services' sector aims to increase the number of union memberships particularly in those industries with a low degree of membership. At the same time, it is those industries that have the highest growth among business-related service providers. However, it is questionable whether the formation of a large trade union for the services' sector is the right way to achieve this aim.

Contact

Prof. Dr. Ulrich Kaiser, Phone: +49(0)621/1235-134, E-mail: kaiser@zew.de