Peter Hintermeier, a 60-year-old pipe fitter, is among those who have helped make Germany competitive again. But he is not too happy about it. Originally from the area around Erfurt in eastern Germany, Hintermeier has spent 15 years as a temporary worker, going wherever the jobs are. “You’re doing the same work for less pay,” said Hintermeier, who earns about nine euros, or almost $13, an hour. That is about $2.86 an hour less than the average for eastern Germany, and $7.16 to $8.59 less than in wealthier regions of the country, where Hintermeier often works. On top of that, “there aren’t many opportunities to develop,” he complained. And he said he often encountered resentment from co-workers who consider him low-cost competition. Hintermeier is one of nearly a million temporary workers, almost three per cent of the workforce, who in recent years have given German companies much more flexibility than before.

Temporary employment played a critical role in helping Germany weather the 2009 downturn, as employers were able to quickly respond to ebbing demand by reducing payrolls. But, an increasingly vocal group of critics say that the loosening of regulations in 2003 allowing companies to hire temporary workers has created a vast cohort of poorly paid, poorly treated employees with slim chances of obtaining permanent jobs. With the economy surging once again, unions are lobbying for legislative changes and raising the issue of temporary workers at contract talks. “Temporary work has enabled a shadow labour market,” opines Berthold Huber, chairman of the IG Metall labour union. “That is intolerable.” Temporary employment, already a boom industry in Europe, got more support when the last restrictions on labour mobility among EU countries fell on May 1 — coincidentally the day when Europe celebrated the labour movement. Temporary-employment agencies are able to recruit workers in low-wage countries like Poland for jobs in Germany and elsewhere. “This certainly raises the pressure,” said Sandra Siebenhueter, who has studied temporary work for the Otto Brenner Foundation, a research organisation in Frankfurt that is financially supported by IG Metall. While there are plenty of anecdotes about temporary workers who are receiving worse deals than permanent employees, the loosening of the traditionally rigid German labour market has been crucial in preventing at least some companies from shipping production abroad.

“Our global competitiveness would deteriorate if we were unable to use the instrument of temporary employment,” said Bayerische Motoren Werke, the maker of BMW vehicles, in a statement. Seventy five per cent of the company’s workforce was in Germany, while 80 per cent of its car and motorcycle sales were abroad. At the heart of the debate is the question of whether a temporary, lower-wage job is better than no job at all. The rise of temporary labour has contributed to a plunge in German joblessness. The unemployment rate has fallen to just above seven per cent, or 3.2 million people, from nearly 12 per cent in 2005, or almost five million people. Temporary employment agencies have soaked up a large proportion of those jobless people, many of whom lack training. The industry draws two-thirds of its new employees from the ranks of the unemployed, according to a study by the German Federal Employment Agency. Randstad Holding, a global temporary-employment agency based outside Amsterdam, has created 50,000 jobs in Germany over the last two years, said Ben Noteboom, Randstad’s chief executive. “Most of the people hired had been jobless,” he said. “In the past, staffing was difficult legally,” Noteboom said. “The moment it changed, the market started to boom.” He said that he was baffled by efforts to tighten restrictions on temporary hiring. Abuses by a few companies had turned public opinion against the industry, he said. “In Germany, we do see that there is more aggressive talk against our business,” says Noteboom. “I don’t know how many difficulties you want to create for your companies to stay in the country.” In fact, Noteboom says, Germany still has some of the tightest protections anywhere for temporary workers. He said that he considered “temporary worker” a misnomer in the first place. In Germany, Randstad’s workers have the status of regular employees with full health and pension benefits. They are simply lent to other employers. Norbert Reithofer, the chief executive of BMW, has often said that the company’s use of temporary workers helped the automaker stay profitable during the steep downturn in 2009 because it could quickly reduce the workforce when sales started to plunge. German labour laws normally make it costly and time-consuming to let permanent employees go. “Temporary workers bring a flexibility,” said BMW in a statement. The company said that it paid its temporary employees the same union wages as its permanent ones. Labour representatives, however, said that other companies were using temporary workers to replace permanent employees and were systematically paying them less than permanent workers doing the same job.

On average, temporary workers earn 20 per cent less than permanent workers, according to the Otto Brenner Foundation. Sometimes the gap is as great as 40 per cent. Siebenhueter, who conducted the Brenner study, said that less than 10 per cent of temporary work assignments led to permanent jobs. “Companies are letting go of the workers with good wages and security and creating insecure jobs instead,” said Joerg Weigand, an organiser for IG Metall, which represents workers in the automotive and metals industries. Weigand concedes that his campaign to minimise the use of temporary workers in Germany stands little chance of winning support from the centre-right government, led by Chancellor Angela Merkel. But IG Metall and local workers councils have pressured companies to stop using temporary workers or at least to agree to pay them as much as permanent employees or otherwise improve conditions, he said. The union also plans to make temporary work an issue in nation wide contract talks next year. German lawmakers have imposed a minimum wage for temporary workers of about 7.80 euros ($11.17) an hour in western Germany and 6.90 euros ($9.88) in eastern Germany. That is low by German standards but high enough to reduce the incentive for agencies to bus in impoverished Slovaks or Romanians from Eastern Europe. Hintermeier said that he had been offered full-time jobs a few times. But he turned them down because the companies had a poor record of paying on time. He now works with the union to try to improve conditions for temporary workers. But given the global competitive situation, he says, “I don’t have a lot of hope anything will change.”