Building boom attracts hordes of illegal eastern workers

Date: 11/02/1999

By Tim Jones

BERLIN is a building site. The federal government is completing its move to the old Prussian capital this year at a cost of €4 billion, including €400 million for refurbishment of the Reichstag parliament building.

But even without the transfer of the government from Bonn, the redevelopment of 50&percent; of the city's central business area would have been necessary.

Large chunks of the mock-Stalinist monstrosities lining Unter Den Linden and the whole of the once teeming Potzdamer and Leipziger Plätze, flattened by wartime bombing and postwar clearance to make way for the Wall, had to go simply for the sake of civic pride.

The low-line Berlin landscape is now marked more by cranes and scaffolding than by past architectural glories; a fact reflected in one of the city's most popular postcards.

The upshot of this construction frenzy has been a prodigious growth in employment for builders, and a stiff test for the EU's commitment to central and eastern Europe and the free movement of people.

At the beginning of the Berlin boom of the early Nineties, Germany accounted for one-quarter of all construction output in the Union and the reunited capital became a Mecca for 150,000 eastern European building workers.

The effects on wages and conditions for German workers were obvious. The federal authorities responded by signing contracts with central and eastern European countries (CEECs) governing the employment terms and conditions of Werkvertragsar-beitnehmer, or 'project-tied workers'.

Under these deals, big German contractors, including several household names, would be assigned a quota of CEEC workers, who would all need work and residence permits and could only labour on a specific building project for up to a maximum of two years.

Each contract contained a clause stipulating that, if unemployment in the area where they were employed rose, a set number of CEEC workers would have to return to their country of origin. Inevitably, bogus contracts for projects were awarded, quotas were exceeded and working terms illegally extended.

In Berlin, where unemployment tops 16&percent; of the potential workforce, the rules on hiring eastern Europeans, Russians and Ukrainians were even tighter. Yet the reality is rather different.

“Officially, Poles are not allowed to work in Berlin so it is hard to get official statistics,” said Hans-Peter Meister of the Polish Social Council in Berlin. “The last official figures said there were 700 workers, but the real number is closer to 15,000-25,000.”

This is hardly surprising given the proximity of the Polish border to the new capital. “Even though it is illegal, there are about 20 different ways of getting a Polish worker into Germany,” said Meister.

A favoured route is via former German territory, according to IG Bau, the labour union which represents 700,000 construction workers. “A lot of Polish workers are said to be Germans, because they come from Oppeln, which allows them to work here on a legal basis and not be affected by cuts in these state contracts,” said IG Bau spokesman Michael Knoche.

Oppeln, now named Opole, is a city in southern Silesia which was ceded to Poland in 1945.

Yet the Poles, whose own building boom has sucked in 60,000 illegal German workers, are by no means at the bottom of Berlin's social ladder. IG Bau has found cases of Russian construction workers being paid less than 50 euro-cents per hour, compared with the gross minimum wage for non-German workers from European countries of €8.18.

According to the union, a common practice among the less scrupulous employers is to pay the minimum wage, but deduct inflated accommodation costs and travel allowances from workers' pay-cheques, thus driving take-home pay well below German levels.

“Big companies cut their workforce to a minimum, hang on to their skilled architects and engineers and look for foreign workers to carry out the Hilfsarbeiten - the unskilled labour,” complained Knoche.

IG Bau is hopeful that this trend will be reversed once the EU's posted workers directive takes force in September.

This legislation, which lays down rules on conditions for workers temporarily employed in another member state, establishes maximum work and minimum rest periods, paid holidays, minimum pay rates and health and safety standards.

This builds on a three-year-old German law which forces contractors to inform their local labour office of the names of posted employees, the length and place of work.

Failure to meet minimum pay and holiday standards can result in fines of up to €51,000 and exclusion from future public contracts.

“We are now positive that things will get better and we can win back some of the 200,000 jobs we estimate have been lost because of illegal employment and unfair competition,” said Knoche.

But given that, whatever Union laws might say, hundreds of thousands of people are prepared to labour with no health protection and at one-quarter of the rate offered to German workers, his optimism may turn out to be misplaced.

Berlin in figures

Gross domestic product (annual change)

1997 1998

Berlin +0.7&percent; -0.5&percent; to +0.5&percent;*

Germany +2.2&percent; +2.8&percent;

Working population (annual change)

Berlin -57,300 -30,000 to -35,000*

(-3.8&percent;) (-2.0 to -2.5&percent;&percent;*)

Germany -1.3&percent; 0&percent;

Unemployed total (annual change)

Berlin +29,700 +7,500

(+ 12.6&percent;) (+3.0&percent;)

Germany +10.6&percent; -2.5&percent;

* Forecasts: final figures not available

Costs of transferring federal government to Berlin (in €billion)

Cost of renovations and new buildings 4.1

Compensation payments to city of Bonn 1.43

Staff-related costs (relocation expenses, travel etc) 0.485

Other expenses 3.985

Total 10

Total subsidies paid to west Berlin in 1989 7.4

Source: Berlin Senate for economy and enterprises; Press and information office of the State of Berlin