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German hourly labour costs outstrip EU rivals

Germany's average hourly labour cost was €31.70 in 2013, giving it the seventh highest rate among the 28 EU countries - and its costs are rising faster than the European average.

Published: 12 May 2014 11:02 CEST

German hourly labour costs outstrip EU rivals

Builders at work on the European Central Bank in Frankfurt. Photo:DPA

The federal statistics office, Destatis, reported on Monday that private sector employers in the country paid 34 percent more per hour than the European average, but three percent lower than in neighbouring France.

The country was neck and neck with Finnish employers.

And recent years have seen a steady growth in labour costs in Germany, with private employers paying on average 2.7 percent more per hour each year between 2011 and 2013. From 2004 to 2010 it only rose by an average of 1.4 percent each year.

Workers in Germany could also enjoy their biggest annual wage rise this year since 1992, Bild newspaper reported on Monday, because of low inflation and wage agreements made between workers and their employers.

“An upturn is finally in sight in Germany which could benefit the whole population,” Gustav Horn from economic institute the IMK said.

The highest overall hourly labour costs, according to Destatis, were in Sweden, whose employers pay an average €43 an hour, followed by Belgium (€41.2) and Denmark (€39.80).

The country with the lowest average hourly costs in the EU was Bulgaria at €3.70.

In the manufacturing sector, German industrial employers paid out an average of €36.20 per hour, placing them fifth in the EU after Sweden, Belgium, Denmark and France respectively.

The UK ranked almost exactly in the middle of the bunch at 13th, with average hourly costs in the private sector at €21.10, and labour costs in manufacturing standing at €22.

Labour costs consist of gross wages added to non-wage costs, including social security and pension contributions.

SEE ALSO: Ten things you should do in a German office

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Germany or Austria: Where is it easier to get an EU Blue Card?

Though obvious friends with a deeply linked history, Germany and Austria are competing against each other in the global race for skilled workers. Germany needs as many as 400,000 new skilled workers a year to plug its labour market gap. There are over 100,000 vacancies in Austria – a country of just nine million people.

What eligibility rules for an EU Blue Card are there in each country?

In Germany, nationals from countries that need a visa to enter, which includes most non-EU countries, first need to apply for a visa that will allow them to take up gainful employment – which could include a jobseeker’s visa.

After that, they can make an appointment at their local immigration office to obtain an EU Blue Card. If someone is a national of a country that doesn’t need a visa to enter Germany, such as an EU/EFTA state or a handful of non-EU countries like the USA, Canada, Japan and the UK, they can apply for their EU Blue Card after arriving in Germany.

For many EU Blue Card applicants in Germany, they’ll need to have:

A university degree linked to their job
A job offer with a proposed salary of at least €56,400 a year

However, the salary requirement drops to €43,992 annually if the applicant is filling a job in a profession experiencing a particular shortage in Germany. These include doctors, engineers, IT specialists, mathematicians and natural scientists.

A key factor here is whether someone looking to get an EU Blue Card is a national of a country that needs a jobseeker visa to enter Germany in the first place. People from these countries (which includes most non-EU countries) may have a slightly tougher time. That’s because, in addition to fulfilling the requirements of an EU Blue Card, they’ll need to have a few extra things to get the German jobseeker visa. These are:

proof of German language skills (typically B1 level)
proof of ability to pay living costs

Additionally, people older than 45 and coming to Germany for the first time on a work visa need an offer with an annual salary of at least €46,530.

The German city of Munich.

The German city of Munich. Photo by ian kelsall on Unsplash

Another thing to keep in mind is that the German government is currently trying to push through a reform of the immigration laws, which aims to make it easier for skilled workers from abroad to enter the country. As part of this reform, the rules for IT professionals are set to be relaxed so that people with career experience or skills can be accepted for a Blue Card without a university degree.

READ ALSO: What’s in Germany’s new draft law on skilled immigration?

By contrast, as things stand at the moment, Austria’s EU Blue Card salary requirements are slightly easier, even if other factors remain the same. You can also apply for it at an Austrian mission abroad before arriving. You’re eligible for an EU Blue Card in Austria if:

You have a university degree which matches your job OR
If applying to the IT industry, you have three years of relevant experience, as long as you’ve earned those in the last seven years.
A job offer with a proposed gross salary of at least €45,595 a year

So, Austria’s overall annual salary requirement is more than €10,000 lower than Germany’s – unless the applicant is in a skilled profession the German labour market is particularly short of. In that case, their salary requirement for an EU Blue Card in Germany is around €1,500 less than in Austria – but only for those professions.

READ ALSO: How Austria is making it easier for non-EU workers to get residence permits

However, one key factor in Austria is that the company offering the job needs to prove that there are currently no Austrian residents unemployed and registered with the employment agency AMS that could fit that particular position.

According to the Austrian authorities, one of the main requirements is that “the labour market test (Arbeitsmarktprüfung) shows that there is no equally qualified worker registered as a jobseeker with the Public Employment Service (AMS) available for the job.” This could be particularly tricky to prove.

What privileges exist for those are already hold an EU Blue Card?

Other than the obvious right to live and work in the country for at least two years, EU Blue Card holders in Germany are typically eligible for permanent residence much earlier than normal.

While a regular applicant is eligible after at least five years in Germany, EU Blue Card holders can apply for permanent residency after 33 months – or just under three years. Blue Card holders who demonstrate good German language skills – such as by passing a certified language test – can get permanent residence after 21 months, or just under two years in Germany.

EU Blue Card holders in Austria can apply to stay longer than two years with another special card – the Red-White-Red Card Plus. Germany, by contrast, makes permanent residence available quickly. (Photo by Pixabay / Pexels)

After 21 months of working in Austria under an EU Blue Card, you can apply for a Red-White-Red Card Plus. This card gives you unlimited access to the Austrian labour market and the right to stay with similar conditions to those enjoyed by permanent residency holders in Germany. However, it runs out in Austria after a year.

After two years of legal residence in Austria and completion of an integration module, you can get a Red-White-Red Card Plus that’s valid for three years. It takes people five years of residence in Austria to qualify for permanent residency, so a Blue Card and then a Red-White-Red Card Plus can potentially give someone a path to permanent residency in Austria. However, the path requires more bureaucratic steps than in Germany.

The eligibility versus rewards trade-off

Ultimately, an EU Blue Card is a bit harder to get in Germany than in Austria for non-EU skilled workers in most professions, when it comes to the minimum salary requirement being higher. However, Austrian companies need to prove that a candidate offers something no other unemployed person in Austria can offer.

That said, those who do get the EU Blue Card in Germany have an easier, more guaranteed path to permanent residence in Germany, much sooner than in Austria.

We should note though, that both countries have other types of work visas for people who don’t qualify for the EU Blue Card.

READ ALSO: How to apply for Germany’s new ‘opportunity card’ and other visas for job seekers

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