As from January 1, 2015, there is a legal minimum wage of 8.50 euros per hour for the first time in the Federal Republic of Germany. Germany is now one of the 21 out of 28 member states of the European Union to have a cross-industry minimum wage.

About 3.7 million workers from the low income segment can now profit from it. Through the introduction of a minimum wage, employees with unreasonably low salaries are now protected. Thus it should contribute to a fair and functioning competition and reduce the number of workers who despite full employment are obliged to rely on social welfare.

Employers will have to respect the statutory minimum wage, valid from the beginning of 2015, or otherwise will face back pay and fines as high as 500.000 euros.

The minimum wage is applicable to all dependent employed workers working in Germany, including foreign employees and German or foreign companies. The minimum wage is also valid for season workers, minijobbers and pensioners.

There are inevitably a few exceptions. For example, the new law stipulates that children and adolescents without professional qualifications, trainees, volunteers and interns are not required to be paid the minimum wage.

The minimum wage is valid through all branches without exception. For branches with wages traditionally lower than 8.50 euros, there is a transition period of three years until December 31, 2017, which foresees a gradual adaptation to the minimum wage. Until then, lower wages are still allowed.

With the introduction of the law on minimum wage, employers have the obligation to record the working time of marginal and temporary employees as well as of the economic sectors employees, as called in paragraph 2a of the law against illegal employment. The same obligation applies to temporary employment agencies. The records of the beginning, end and duration of the daily working time must be kept during at least two years.

The law on minimum wage provides that employers who are based abroad but active in Germany in the branches described in paragraph 2a of the law against illegal employment have to submit a written statement in German on an official form to the competent authority of the customs administration prior to any work or service.

In the event of non-payment of the gross minimum wage to the employee from the employer or subcontractor, the law on minimum wage provides the liability of the German contractor for the net remuneration.

Controls on the compliance of the minimum wage provisions are carried out by the Financial Control of Undeclared Employment (FKS) of the Federal Customs Administration. In order to be able to control the compliance effectively, the FKS will soon create 1.600 new positions.

Article collaboration:
Wendler Tremml
Rechtsanwälte
RA Michael Wendler
www.entsenderecht.de

On the way to work, other rules can be observed, which simply cause despair and raise.

It already begins with the morning greetings: should I say Guten Morgen (in Hannover), Moin Moin (in Hamburg) or Grüss Gott (in Bayern)? And, of course, foreigners in Germany flood me with questions as they just cannot make sense of us.

Then, on the way to work, other rules can be observed, which simply cause despair and raise a question: why are only dark-colored Mercedes, BMW, Audi and Porsche allowed to drive on the left lane of the highway? And caution is required as cars will not be used, they will be worshiped, so don’t even think about leaning against one and NEVER touch it!  And it goes without saying that there is no such thing as instinctive parking.

And all this despite the length of the traffic news report, which only mentions traffic jams of more than 5 km, and are much longer than normal news.

Once at work, you wonder then why Germans drink the weak but undrinkable filter coffee in the office only during work hours.  There will be no mercy: no lunch but just a quick, unappetizing sandwich as one has to be disciplined and finish the daily 10-point work plan. There is no room for small amenities. In addition, there are rules and unwritten laws for literally everything. Why else would you always have to introduce yourself by name on the phone, despite the fact that you don’t even know each other? Or address work colleagues formally and remain stiff and distanced with one another in order not to seem unprofessional. They are all so horribly disciplined!

And it just gets more and more complicated because as a foreign investor, you find out how hard it is to find employees, not to mention specialists. So why exactly has German Chancellor Mrs Merkel allowed so many specialists to retire early when they are clearly lacking in the economy? And why so much talk about high unemployment when employees are missing everywhere?  Questions and questions, which seem to point out that we Germans make life more complicated for ourselves!

Yet, every work day eventually ends and you look forward to the free evening until you realize that you need a calendar even for your friends! Once this obstacle is overcome, in South Germany, you make your way to the Biergarten, but there too, dangers exist. The folding benches can bounce right up like a rocker when someone at the other end suddenly stands up. How do the Germans navigate all this? But again, the next cultural shock is already around the corner: while the rest of the world spends a fortune to remove legs and arm pits hair, we German seem to actually fertilize these body parts. Why is that?

Finally, as you walk back home and cross the street on a red light in absence of any traffic, you will get lectured or even scolded by other passers-by. And yes, local buses and trains do run punctually but by the time you have figured out the system, you have already missed three metro trains.

In case I have (just) slightly exaggerated, do take it with humor to avoid the ridicule of taking things too seriously!

If we do not find the way back to the truth, the way back will be so much more expansive as nothing is more expansive than false information

In view of the economic situation, more and more purchase index, growth rates, money supply and endless surveys are thrown around, all of which are supposed to underpin politicians and self-proclaimed economists’ arguments. Allow me to tell you that in any case I do not believe such data, and even less so when I haven’t proven them wrong myself.

Here are a few examples:

The lie about pensions:  Europe has a massive problem due to the low birth rates and the Baby Boomers facing retirement. Not that Germany is an exception, but to make the people believe that pensions are secure and that retirement age could go down is in my view simply untruthful and irresponsible. Already now I just need to look around me to notice how many older fellow human beings have to work past 65 years.

The unemployment stat:  Not only do they seem blatantly manipulated but what is worse is that their informative value is nearly zero. I was just visiting a good friend in Madrid who opened a restaurant and to then discover that he could not find employees, not to mention really qualified ones.  There are of course many unemployed but their qualifications and job search are often not oriented towards the job market. And the State offers no incentives in that respect, but instead promises social benefits for more and more people, which fewer and fewer workers should finance.

Product information: Not a day passes by without having to see that products expiration dates are manipulated, ingredients not indicated, or the actual origin covered up.  The consumer might even wish for the illusion of an ideal world but even so, the truth keeps losing ground.

Internet:  So much of the endless information available on the Internet is simply not double-checked; the anonymous nature of the Net actually encourages denunciations, rumors and untruths.

Resumes:  In general they also reflect the above-mentioned situation: written and assumed will be what is considered loved or successful. Just check the stated language skills and you will be horrified. An experienced HR professional sees right through this but then easily makes the following mistake: not answer the applicant or send a vague, computer-generated reply.

Here I share Socrates‘view: I know that I don’t know anything. If we do not find the way back to the truth, the way back will be so much more expansive as nothing is more expansive than false information from which we draw false conclusions and false and costly measures.

In that context I always try – and you may find it old-fashion – to meet all clients and contacts in person in order to assess each situation with common sense, remain realistic and, as a result, avoid long-term mistakes and unnecessary costs.

Taxes: like a sword of Damocles, they hover over companies

Taxes: like a sword of Damocles, they hover over companies; like snakes, business leaders freeze when faced with their complexity; like disasters, their avoidance is often declared as one of the central business objectives!

Indeed, we don’t have to pretend: the tax burden is increasing, as is the complexity of tax regulation. Tax competitiveness between states does the rest, in particular since national laws have been and are being adjusted according to international tax optimization options (read: tax avoidance).

As a result, one can see increases in uncertainty, in grey area tax avoidance strategies and in tax evasion. These consequences are being accompanied by a cost explosion for tax firms which often have to explain to out of their depth fiscal authorities what the international tax situation is like. Even when no taxes are due, the costs for those advisory services are born by the company. Politicians and fiscal authorities are never held accountable for their mistakes after all! Certainty for investors looks different!

However, to me the most depressing aspect seems to be the situation of the large mass of mid-size businesses that are the back bone of business after all! According to my estimates, these represent over 90% of all companies (with up to just 10 employees). These firms are not only simply unable to cope with the complexity but are also unable – unless they are set up internationally – to even participate in the international tax competition.

Of course I could “just” demand the simplification and harmonization of at least corporate income tax, wage tax and value added tax inside the European Union. But I am fully aware that, on the one side, I cannot change anything and that “only” Europe is not enough, and that, on the other hand, politicians won’t accept such a perceived disempowerment.

What remains for me and entrepreneurs, who never participate in demonstrations, is to point out those glaring problems more or less loudly, but certainly with insistence. Harmonization and simplification of the tax system will, in my opinion, not only improve transparency, decrease costs for both companies and the state, as well as increase tax honesty, but will also increase the credibility of the taxation system.

To me, this basic message is most accurate as, generally speaking, much more can be achieved by pooling diverse strengths together than by operating alone. And a most important one as well because as a business owner, that way, you send out the clear message that with team spirit a lot more can be achieved than with single, genius soloists. And to remain in the football field: why does FC Barcelona or FC Bayern Munich generally offer much better football than the Spanish or German national teams respectively, despite the fact that the majority of the players is the same. The reason is that they are not just a well-integrated TEAM, they stick together and have to do so every day.

Let me describe my x-ray vision and have a closer look at internationally active businesses. Why are some growing more than others and why are some a lot more profitable than the rest?

First, it is clear to me that companies that work on the basis of a consistent brand approach, team work and a multinational cooperation are a lot more successful. And let’s be realistic: it is just as clear to clients who are 10.000 km away, and with the same consequences.

That brings me to another factor, profitability. In my view, the most profitable internationally active businesses are the ones with the best local setup in the export country. When I really want to inform myself about another country, direct local knowledge is necessary to remain competitive. It sounds admittedly somewhat martial but the information value of my respective local network (whether Aleksey in Ukraine, Gabriel in Sao Paulo, Keisuke in Tokyo, Iwona in Warsaw or Vikal in New York) is almost always a lot more compact, realistic and to the point than what the Internet can tell me.

Going back to the FC Liverpool anthem, with just hope in the heart you cannot achieve anything, or as my father would keep telling me:  you can’t get something from nothing.  That is why everybody should build his own glocal network. Our glocal Adminex partners meeting in Cologne at the beginning of April will give us such an opportunity. Our partners are welcome to come by, with no strings attached and free of cost, introduce themselves and ask questions.

In this context, my glocal regards to all of you.

Marc Ambrock is all sympathy and attention but he also values Germany punctuality. He has a complicated agenda, is constantly travelling and makes most of his time. He is a German entrepreneur who has his company in his genes, Ambrock, an industrial coating company with 125 years of experience behind it. Marc Ambrock, however, wanted to launch another company, Adminex, with offices in all of Europe, in Barcelona and Madrid, which helps small and medium businesses in their internationalization process.

It is his passion, because it allows him to see the peculiarities of each country, of each culture and draw different strategies. This enables him to touch his interlocutor’s arm, being fully aware that a German would not do it. But Ambrock lives in Barcelona, a city he considers as one of the best in quality of life.

And maybe for that reason, this German businessman, who is well connected with the Catalan economic and business world – he is a frequent participant in the events organized by the employers’ association Foment –, sees clearly that Catalonia’s process toward independence can be bad business for everyone. “States compete like companies and politicians need time to understand that”, claims Ambrock.

Exit strategies
First conclusion after this statement? Companies find their own ways and flee from situations of uncertainty. That is why this entrepreneur relies on his experience and assures that “many companies already have their plans to exit Catalonia if necessary; they have already developed exit strategies, even if they do it slowly”. And he adds that they are not just international companies but also Catalan ones with head offices in other parts of Spain.

Does, therefore, a real fear exist, as recently claimed by a group of German managers? Ambrock was not part of the group, who made public the so-called Declaration of Barcelona, but does support its reflections. If Catalonia becomes independent and exits the European Union, “this is a problem of great dimension which businesses cannot accept”.

France and Morocco
He adds with clarity that “insecurity kills any business”. “This is not a threat, it is a fact, and international companies will not accept to have their development capacities limited for political reasons”. Moreover, he explains, “we have all seen that the European Commission is taking more and more decisions, so we simply cannot opt out”.

In regard to the possibility of companies setting up their offices where the best opportunities are to be found, Ambrock mentions the case of France. He states that it produces fewer cars than Spain because the factories have moved to Morocco “which offers them the best conditions possible”. That is to say that there is nothing secure now, “and even more in situations of instability”.

The loss of the industry
But Marc Ambrock, very knowledgeable on Russia and the problems of Russian companies, does not want to appear as a pessimist or as opposed to just any independence movements without offering more arguments. For the CEO of Adminex the problem is that the independence ideal “is not backed by a very serious project”. And there he starts explaining his own experience at the forefront of Adminex. This entrepreneur understands that the reindustrialization plans, as described by the Minister of Business and Labor Felip Puig, will have little effect “because in this case we are late”.

Catalonia has not drawn a horizon for the future, pushing for those sectors in which it could indeed be a state-of-the-art country. He stresses that “the companies that currently show interest for Spain, the ones that we are orienting at Adminex, belong to very specific sectors such as bio-technology, medicine and information technology. They are in no way companies of the industrial world”.

Investment is coming back
He admits that Catalonia is receiving foreign investment, as the Government of Artur Mas has highlighted in the past months, but sees it as part of a recovery process of Spain as a whole. He explains, “it is true and we are noticing that investment is coming back to Spain, which is already in a process of economic recovery, and as a result, Catalonia also benefits from it”.

For Ambrock – a much-respected name in Germany for its weight in the German industry – Catalonia should take more advantage of a platform like Spain and Europe. “With dimension, by being part of something greater, you can be more competitive in global markets”, he claims. But in which sectors? He enumerates a few in which he firmly believes. “In medicine, in the aeronautical sector – with a center like Toulouse so close-by -, in bio-technology and in tourism, we should be able to be leaders”.

Yet, this entrepreneur who adores Catalonia, but whose ideal would be to have an ID “of the United States of Europe, because I am German”, warns that Catalonia’s main problem “is training”, no matter what its political future holds. Human capital is the key to compete, and in that aspect “improvement is necessary”, he concludes.

By Manel Manchón in Economia Digital ( 07/03/2014 )

In a global world, which is fortunately slowly but surely growing together, there are nevertheless a few recent trends that concern me as they have more to do with separation and distance then mutual understanding and collaboration. Catalonia and Scotland want to isolate themselves, populist politicians are catching votes in Europe using xenophobe slogans, and even Switzerland has just voted in favour of limiting the access to foreigners. And in Germany, the fear of Romanians, Bulgarians and East-Europeans is being fuelled.

In that light, I no longer really understand the world as it seems schizophrenic to me: on the one side, we would like to drive German cars, drink French wine and English whiskey, wear Swiss watches, and eat Chinese or Indian food while also needing care givers for an aging society. And what is the reaction? We keep the barriers in the European Community high so that no work force come in, and impose non-European products with a great amount of separate customs duties while simultaneously subsidizing the domestic industries, which is not an exclusive European characteristic.

I don’t think that I am deluding myself when I think that without my central and East-European colleagues, I can just as well close down our plant in Germany. You can also simply ask around in Novartis or Roche in Switzerland about the percentage of their foreign workers. First you will not believe it and then you will be amazed!

Or just try to obtain a visa for an international colleague for maintenance work or a business meeting. I promise you that, rather than disbelief, you will feel great anger at how much energy is wasted by the states in order not to grant you any visa or only when it is too late. One of my female colleagues got almost stuck in the Middle East because her visa expired due to a late flight arrival. And it was all just for a one-week business stay in New Zeeland! (Here our gratitude goes to the Spanish consular officers for handling the issue unburocratically and at their own risk!!).

In my activities I am always and everywhere a foreigner, and thus RESPECT is definitely my approach of choice. That is why I am a strong supporter of TOGETHER and not of SEPARATE, even when this often means that the pay off will only come in the long term.

In that sense: let us strengthen the TOGETHER.

After six years of crisis, Europe is back; slowly so, but back. The euro has survived, the first structural measures have been implemented, the economic indicators are showing a light growth for next year and trust is quietly recovering. Not that all is now resolved, but…

The situation in the fast-growing emerging countries is not what many businesses from these markets were hoping for either. First, because these markets also need time for their development; second, because they too have to consolidate their growth; and third, there as anywhere else, is not all just about free trade. In short, there as well, all that glitters is not gold.

In the so-called BRIC countries, and for a series of reasons, any kind of production is not exactly made simple: trade barriers, poor quality of produced goods, just-in-time delivery made unrealistic by long delivery channels, some corruption, and last but not least, cultural barriers which greatly raise costs and do not match the immense expectations of the end client. As a result, many businesses are find themselves attracted again by Europe’s relative political and economic stability. On these grounds, Europe is considered the lesser evil.

Simultaneously America’s economy is rising; a country which has always been closer to Europe for cultural reasons, trusts more its institutions and also prefers to build on the long-standing connections with the Old Continent.

Even the Asian economy is leaning more towards Europe, in part conditioned by weakened exchange rates – like in India’s case – and in part by strategic reflections. This demonstrates that some of the old European industries are still setting the standards for the rest of the world. However, Europe also shows a divide, especially in regards to investors.  On the one side, there are solid industries, infrastructures and reliable institutions in Central Europe, on the other side, you see weakening states with less productivity, mostly in the South.

In our context of shrinking margins and higher cost pressure, these arguments weigh twice as much. That leads, in my view, to a London-Frankfurt-Zürich axis, where and which determines the central decisions and which the non-European investors also have to turn to. We will have to face these changes, whether we like it or not.

Yes, I do believe that Europe is coming back but I also think that so will the crisis if we don’t push for more reforms. Unfortunately at the moment, Mrs. Merkel is setting a rather poor example. For all that, and as a precaution, I am preparing myself for a long-lasting crisis, that is, for lasting and quick changes in the market circumstances.

Let me therefore review a couple of his qualities, in my view, which in Guardiola’s case as well as in the internationalisation of an export company can only lead to success in the long term:

Openness:  Already in his earlier days as a player in Italy, Guardiola quickly learnt and showed that one needs to be completely open and adapt to the local reality without however giving up on his own identity.

Learning capacity: openness is really the first step toward learning capacity, which is the ability, when in a new country, to accept the new circumstances how they are while building them in your, as yet, frame of experiences and perceptions. At the end of the day, it means progression, without which no business can survive.

Language skills: learning steadily is an essential cornerstone, which in an internationalisation process means first and foremost language skills. Not only because communication is in and of itself crucial to your surroundings, but also because language represents the key to culture and therefore to the market of the export country. When Guardiola gives sports journalists a post-game interview in German, one can only admire him, his language skills, his attitude and professionalism.

Humility: in his speeches we can observe this facet, which is a rare thing in today’s world: decency, vision and thoughtfulness linked with immense humility, a combination inherent only to great personalities.

Leadership ability: he gives clear indications, is constant and rigorous, and stands unconditionally by his players. But he also demands performance! This generates credibility and creates moral values, something necessary in every company.

Excellence: this leadership ability brings about quality, both a trademark of excellent companies and a motor of growth and international competitiveness.

Guardiola is considered with the respect granted to someone who lives up to his values, leads clearly and will probably bring FC Bayern Munich to new heights.

(I am revealing myself hereby as a fan of excellence, but also a fan of FC Bayern Munich and Josep Guardiola).

In that regard, my advice to export companies is “completely Guardiola or nothing”, as with half things you won’t go very far.

I have had the opportunity to take part in the Catalonian Telecommunications Diada (National Day), organised each year by the Catalonian College of Technicians and Technical Telecommunications Engineers (COETTC), on a talk together with executives of Vueling, LetBonus, Fundosa and Plasticband, where we analyse the company growth method on a complex environment such as the current one.

The rest of the lecturers belonging to different sectors – Internet, aviation, industrial and services — it is outstanding that all of them coincided on the fact that one way to face the crisis is close management, controlling all details, to be able to introduce improvements in all circuits and to adjust costs as a result of the rationalisation and introduction of innovations in production. Quality is the key for a company to leave crisis and to start a growth stage.

Nowadays, internationalisation is a way of escaping for companies.

In Spain, many people believe that only companies from countries in crisis, such as the ones of the South of Europe, have headed for internationalisation, taking advantage of the improvement of competitiveness due to reduction of labour costs. Nothing could be further from the truth, in Germany, companies have launched into the tackling of Russian and Asian markets as a commitment to the future.

Internationalisation is not a cheap process, neither in time, nor in money, and results are not immediate. On the other hand, internationalisation by means of the purchase of companies is not always a success, especially for familiar SMEs. As for the internationalisation by the acquisition of companies, it is complex because it implies adding to the complexity of the process, a merging of different business cultures.

In acquisitions, on most occasions, staff of the acquired company falls into the binomial of discouragement and demand of labour and monetary improvements. Organic growth is much healthier and does not oblige to an extra financial effort by the purchasing company.

Thus, companies that internationalise must go for contracting local staff of the country in which they are implemented, but also staff from the countries with which they are going to have relationships; clients grow and their loyalty is encouraged if you talk to them on their same language. In order for a German, Spanish, Chinese company or company from any other country to triumph abroad, we must have the idea that it is a local company which is going out to the external market.