Flexicurity in Austria and Germany - is a "floor of rights" for agency workers necessary

Master's Thesis, 2007

28 Pages, Grade: Gut



1. Introduction

2. The Employment Title and the Lisbon Strategy
2.1. The Review Process of the Employment Title
2.2. The Luxembourg Jobs Summit and the Employment Guidelines
2.3. Flexicurity and the EU
2.4. The Lisbon Strategy
2.5. The OMC
2.6. Corporate Social Responsibility (CSR)

3. Flexicurity
3.1. Flexicurity and Agency Work

4. The Austrian Agency Work Legislation
4.1. The Agency Workers Act (AÜG)
4.2. Application and Exceptions
4.3. Duties of the Employers
4.4. Remuneration
4.5. Other Provisions of Interest

5. The German Agency Work Legislation
5.1. AÜG: The Licensing System
5.1.1. Exceptions from the obligation to obtain a licence
5.2. The Personnel Service Agencies (PSA)
5.3. Obligations of the Employer
5.4. The Principle of Equality: Remuneration & Working time
5.5. Other Provisions of Interest

6. Protection in Austria & Germany
6.1. Austria
6.2. Germany

7. A floor of Rights for Temporary Agency Workers
7.1. Protection in the Proposed Directive

8. Conclusions


Agency work is an embodiment of the ‘Flexicurity’ – issue: It is flexible due to its uncomplicated usage and fast availability in companies, but it is strictly regulated in order to provide sufficient security for the workers employed. It was created by the demand in the market for a more flexible method of utilization of the available of workforce, but the need to provide for security of the employee especially in this form of work was always recognized by the trade unions. Formerly called a ‘modern form of slave work’ it is now recognized as legal and its necessity is not anymore contested.

The share of temporary work in Europe saw a growth of 10% between 1991 and 1998 and it is believed to continue to grow. In the overall employment its share is still small: in 1998 a mere 1.4% of the total employment in Europe was agency work, but its dynamics and fluctuation of workforce makes it an important factor in the labour market. Agency work is an important part of the European labour policy as the Social Agenda recommended stimulating the creation of quality jobs, diversifying forms of employment and reconciling flexibility and security.[1] Agency work is not equally spread in Europe: Around 80% of its workforce is employed in 4 countries: the Netherlands, France, Germany and the UK. The methods of regulation of agency work differ considerably between the Member States: Germany and Austria have specific definitions of and regulations for temporary work which mainly cover the relationship between the three partners. Denmark, the role model in terms of ‘Flexicurity’, only has a limited regulation while France, Italy, Belgium et al. have regulated agency work in detail covering not only the relationship but also the status of temporary workers. All over Europe different strategies have been employed to regulate this type of atypical work providing for more or less flexibility or security. On the European level a directive has been drawn up, that provides for significantly less protection than granted in Germany and Austria. The first intentions to regulate the matter are found in the 1980ies: In 1982 the Commission submitted a proposal for a directive on temporary work that was never adopted. After a few fruitless attempts[2] the Commission decided to press for further improvements in the temporary work issue and approved consultation of the social partners in September 1995. The social partners supported the guiding principle of non-discrimination of workers and the comparable treatment with full-time workers. On 19 June 1996 UNICE, CEEP and ETUC announced that they were willing to enter into negotiations on atypical employment and started to deal with temporary work in May 2000. There was a basic disagreement on the concept of the ‘comparable worker’ but converging views were reached on many other points.[3] The current proposal COM(2002) 149 final, is based on this consensus.

The issue if more or less protection should be granted is discussable. For my analysis I have decided to compare the legislations on remuneration while also giving some attention to working time, participation and social rights. My conclusion is that both, Germany and Austria grant more protection than envisaged in the proposed directive. But in view of the low wage level for agency workers and the risk of a circumvention of protective provisions, a strict regulation is still necessary.


During the mid- 90ies unemployment was a big problem in Europe. While relatively low in the US with 5.8 and in Japan with 3.4%, unemployment soared in Europe (especially in the south with over 15% on average).[4] Between 1971 and 1994 the US saw an increase of employment of 55% while Europe only of 11 %. In the US only 9.7% of those unemployed stayed out of work for more than 12 months while in Europe between 17 in Austria and 60% in Belgium and Italy remained unemployed for more than 12 months.[5] It was clear that something had to be done. The possibility of public investment was hotly discussed but finally dismissed as the Member States refused to increase the Commission’s budget significantly.

An important impetus for the Employment issue was brought about by ‘ Delors’ White Paper on Growth, Competitiveness and Employment[6]. It set the framework for subsequent social policy, revived the employment debate and prepared the ground for the Essen European Council. The Essen Council identified 5 job creation priorities: greater investment in vocational training, more flexible organization of work, reduction of non-wage labour costs, a move from passive to active labour market policy and improved measures to help those with particularly high risks of becoming unemployed. Essen served as a model for the European Employment Strategy and its priorities were replicated in what became the employment guidelines.[7]

Essen had a huge influence on the modelling of the Employment Chapter in the Amsterdam Treaty. A further influence on its drawing was that the Member States made 2 issues conditional to its adoption: that the area of employment falls under the national competences and that there are no expensive EU- programmes, for which the Member States would have to pay[8]. This way the role of the Member States as principal actors under the Employment Title is understandable. They are required to co-ordinate their strategies for employment but in a way consistent with the broad economic guidelines (BEPG) adopted under Title VII (Article 125, 126 ECT). According to Article 127 the Community shall adopt a supporting and thus a subsidiary role under the Employment Title. “Together these provisions provide a good example of (…) [the] ’Third Way’ thinking: the principal themes are those of shared responsibility between and within the Community and the Member States, and a decentralizing conception of subsidiarity in which ‘the Community enables and the Member States deliver”.[9]

2.1. The Review Process of the Employment Title

On the basis of a Joint Report by the Council and the Commission, the European Council adopts Conclusions. On the basis of these conclusions, the Council draws up Guidelines that have to be consistent with the Broad Economic Guidelines, and which the Member States have to take into account in their employment policies. The Member States in turn have to draw up an Annual Report[10] on the implementation measures. In the light of the guidelines the Council examines the implementation of the employment policies on the basis of the annual reports and the views of the Employment Committee[11]. If necessary it can emit Recommendations to certain Member States. On the basis of the examination, the Council and the Commission draw up a Joint Annual Report for the European Council.

Although the measures adopted in Amsterdam are built on and bear considerable similarity with those agreed in Essen, certain improvements should be pointed out: 1. the annual guidelines were drawn up to be the key for coordination thus reinforcing centralised cooperation at EU- level, 2. the recommendations given by the Council, although non-binding, are symbolically powerful, 3. the Employment Committee was established to monitor the employment situation and policies and to act as an advisory committee, 4. the Article 129 EC allows the Council to adopt ‘incentive measures designed to encourage cooperation between member states and to support their action in the field of employment’[12].

2.2. The Luxembourg Jobs Summit and the Employment Guidelines

In November 1997 an extraordinary meeting on employment took place in Luxemburg. Developing the fields of action identified at Essen, the summit adopted 19 guidelines under 4 main ‘pillars’: employability, entrepreneurship, adaptability and equal opportunities. They were intended to address ‘the jobs gap, the skills gap, the participation gap and the gender gap.[13]

- I) Employability: It refers to the capacity for people to be employed: ‘it relates not only to the adequacy of their skills but also to incentives and opportunities offered to individuals to seek employment.’[14] Within 6 months every unemployed young person is offered a possibility of training, retraining, work practice, a job or other employability measure; unemployed adults within twelve months.
- II) Entrepreneurship: Member states should make it easier to start- up and run one’s business by alleviating the administrative burden, by providing a clear set of rules , develop the market for venture capital and make the taxation system more employment friendly.
- III) Adaptability: to this end, social partners were invited to negotiate agreements at sectoral and company level designed to modernize work organization, make firms more competitive and ensure a better balance between flexibility and security for workers.
- IV) Equal opportunities: The Commission proposed as a target that the gap between the rates of male and female unemployment in the EU (9.6 and 12.5 percent respectively) should be halved within five years; it also recommended that member states should develop childcare services so as to reach the standards of the three best performing states.[15]

While the 1999 and 2000 guidelines brought nothing new, the guidelines of 2001, drafted against he background of the Lisbon summit added five horizontal objectives to the four pillars, that were designed to reorientate the EES towards the Lisbon strategy: (1) Enhancing job opportunities, (2) developing comprehensive and coherent strategies for lifelong learning, (3) developing a comprehensive partnership between the Member States and the Social Partners, (4) balanced translation of all four pillars and the horizontal objectives by the Member States and (5) developing common indicators by the Commission, the Member States and the Social Partners to evaluate progresses.[16]

The 2002- Barcelona Spring Council decided to simplify the Luxembourg Employment Strategy and to adjust it to the Lisbon deadline of 2010. ”As a result, the timetable of the EES was brought into line with the BEPGs, a three-year policy cycle was introduced and the structure of the 2003 employment guidelines was overhauled. The four pillars were dismantled in favour of three ‘overarching and interrelated objectives’ of ‘full employment, quality and productivity at work, and social cohesion and inclusion’ thus reflecting the Lisbon agenda’s goals. These objectives were then fleshed out by 10 ‘result orientated’ guidelines, the so- called ‘ten commandments’.”[17]

2.3. Flexicurity and the EU

The Luxembourg process is characterized by the struggle between flexibility and social rights: While the flexibility factor is predominant in the entrepreneurship-, employability- and adaptability- pillar; the security element is stronger in the equal opportunities- pillar and the social policy in general. The Treaty of Amsterdam and the Luxembourg strategy together form an attempt to find a ‘middle way’ between the Anglo-Saxon Model with little employment stability and few welfare benefits and the European Model of job protection, high welfare costs and a high percentage of unemployment.[18] ‘The ‘Flexicurity’ theme is found in the Green Paper ‘Partnership for a New Organization of Work’[19], the Communication ‘Modernizing and Improving Social Protection in the European Union’[20] and ‘Modernizing the Organization of Work’[21] But what is more amazing, the EU is beginning to see social rights not only as a burden and impediment to economic growth: “[E]fficiency of our societies as a whole conditions how competitive they may be and the growth they can deliver. If economic growth is to increase human well-being, it must also take into account social and environmental concerns. Equally, the pursuit of high social standards should not be seen only as a cost but also as a key element in the competitive formula. It is for these essential reasons that the Union’s social policy cannot be second string to economic development or to the functioning of the internal market.”[22]

2.4. The Lisbon Strategy

Lisbon intended to provide the Union with the conditions for achieving full employment and not just a high level of employment as envisaged in Article 2 EC. It set out as a goal: “to become the most competitive and dynamic knowledge- based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion”[23]

The Lisbon Strategy covers three dimensions: economic, social and environmental[24] ; but only the social aspect shall be of interest here. The Lisbon strategy demands the modernization of the European Social Model[25], which shall be achieved by addressing four issues: (1) education and training, (2) more and better jobs, (3) modernizing and social protection, (4) promoting social inclusion.

The Summit decided to implement the Lisbon Strategy partly by improving the existing processes[26] and partly through the ‘new’ approach, the so called Open Method of Coordination (OMC) together with corporate social responsibility (CSR). It can be claimed that thus the EC in social issues turned its back on the (in this matter) cumbersome legislative process.

2.5. The OMC

The OMC is based on five key principles: (1) subsidiarity, (2) convergence, (3) management by objectives, (4) country surveillance and (5) an integrated approach.[27] It provides a new framework for cooperation between the Member States, as national policies can be coordinated and thus be directed towards certain common objectives. The Lisbon European Council confirmed the EES (and the BEPG) methodology, renamed it and extended it to other areas such as pensions, information society etc. However there is no single OMC methodology.[28]

The open method rests on soft law mechanisms such as guidelines and indicators, benchmarking and sharing of best practice[29]. This means that there are no official sanctions for those not complying with it. The method's effectiveness relies on a form of peer pressure and naming and shaming, as no member states wants to be seen as the worst in a given policy area.


[1] Explanatory Memorandum, COM(2002) 149 final, p. 2.

[2] COM (90) 228 final of 29.06.1990. OJC 224 of 8.9.1990, p. 8.

[3] COM(2002) 149 final, p. 8 and 9

[4] OECD Employment Outlook, Table A.

[5] Barnard, C: EC Employment law, Oxford, 2006, p. 106.

[6] COM (94) 219.

[7] Barnard: EC Employment law, p. 108.

[8] Goetschy, J: The European Employment Strategy, p. 125.

[9] Barnard, C: EC Employment law, p. 110.

[10] The Annual Reports are called National Action Plans (NAPs). These reports are examined by the Employment Committee.

[11] The Employment Committee (EMCO) has an advisory status to promote coordination between Member States on employment and labour market policies (Article 130 EC). The Employment Committee is obliged to consult the Social Partners who are represented on the tripartite Standing Committee on Employment (Barnard: EC Employment law, p. 111).

[12] Goetschy, J.: The European Employment Strategy: Genesis and Development, European Journal of Industrial Relations, Vol.5 Nr.2, 1999: p.126.

[13] Barnard,C: EC Employment law, p. 115.

[14] COM (97) 497.

[15] Goetschy, J.: p. 127.

[16] Barnard, C: EC Employment law, p. 119.

[17] Barnard,C: EC Employment law, p. 120.

[18] Barnard, C: EC Employment law, p. 126.

[19] COM(97) 127 final.

[20] COM(97) 102 final.

[21] COM(98) 592.

[22] COM(94) 333 p. 2.

[23] Presidency Conclusions, Lisbon European Council. 23 and 24 March 2000, Bull EU- 3/2000, 7-17, at para. 5.

[24] Luxembourg Presidency Conclusions, 22 and 23 March 2005, para.6.

[25] Lisbon European Council, 23 and 24 March 2000, Presidency Conclusions, para. 5, 24 et seq.

[26] Lisbon European Council, 23 and 24 March 2000, Presidency Conclusions, para. 35: No new process is needed. The existing Broad Economic Policy Guidelines and the Luxembourg, Cardiff and Cologne processes offer the necessary instruments, provided they are simplified and better coordinated, in particular through other Council formations contributing to the preparation by the ECOFIN Council of the Broad Economic Policy Guidelines.

[27] http://ec.europa.eu/employment_social/employment_strategy/index_en.htm

[28] Barnard, C: EC Employment law, p. 141.

[29] The Lisbon European Council explained what OMC means: - fixing guidelines for the Union combined with specific timetables for achieving the goals which they set in the short, medium and long terms; -establishing, where appropriate, quantitative and qualitative indicators and benchmarks against the best in the world and tailored to the needs of different Member States and sectors as a means of comparing best practice; -translating these European guidelines into national and regional policies by setting specific targets and adopting measures, taking into account national and regional differences; - periodic monitoring, evaluation and peer review organised as mutual learning processes.( Lisbon European Council, 23 and 24 March 2000, Presidency Conclusions, para. 37)

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Flexicurity in Austria and Germany - is a "floor of rights" for agency workers necessary
University of Amsterdam  (Labour Law)
International Labour Law
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ISBN (Book)
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Flexicurity, Austria, Germany, International, Labour
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Olivia Homolatsch (Author), 2007, Flexicurity in Austria and Germany - is a "floor of rights" for agency workers necessary, Munich, GRIN Verlag, https://www.grin.com/document/115322


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