Slump in Construction, Boom in Illegal Labor

The slumping economy has meant less and less construction in Germany and will lead to job cuts that number in the hundreds of thousands, union leaders said this week.

As many as 150,000 workers will lose their jobs this year as the number of insolvent construction firms climbs and investment in new construction stagnates, said Heinz Werner Bonjean, chair of one of Germany’s largest construction trade groups.

To make things worse, those still employed are suffering from moral problems. Low wages and the increasing use of illegal laborers has led to a crisis situation, say politicians and union leaders. While most other sectors of the Germany economy are declining, illegal labor is booming.

Politicians from the opposition Christian Democratic Union say the industry was worth some DM800 billion last year.

They seized upon the statistic as proof Chancellor Gerhard Schroeder and his social democratic and Green coalition was not doing enough to encourage growth in Germany. His hands-off approach to economic issues is part of the reason illegal labor has found such a niche.

“It’s no surprise that in Germany, only one thing is growing, and that is illegal labor,” said Angela Merkel, chair of the CDU, during a Parliamentary budget debate this week.

Since 1995, the industry has added 500,000 jobs. But Karl Robl, business manager of one of Germany’s unions, said more than half of them have gone to illegal foreign workers, who are paid in cash and pay no benefits.

It is a problem Germany’s politicians are struggling to solve. Earlier this week, Germany’s employment minister announced a law proposal that would increase sanctions against contractors whose sub-contractors hire illegal laborers for construction jobs. Minister Walter Riester said contractors would be held financially responsible for the benefits their subcontractors aren’t paying to the government.

But Bojean rejected Riester’s law proposal and said making contractors responsible for the costs was “going too far.”