Vacation Pay in the Private Sector: Only 44 Percent of Employees Benefit

Collective Agreement Coverage as the Decisive Factor

WSI wage expert Malte Lübker sees this as a structural problem: "Wenn der Tarifvertrag fehlt, fehlt meist auch das Urlaubsgeld – und auch die Grundgehälter sind im Durchschnitt niedriger." Those who work in a non-bound company therefore not only less frequently have a claim to the bonus payment, but often also receive a lower base salary.

There is a clear gap between West and East Germany. In West Germany, 46 percent of employees receive vacation pay; in East Germany including Berlin, only 33 percent. However, according to the Böckler Foundation, in some industries with nationwide collective agreements there are no longer any east-west differences, such as in the insurance industry, the building cleaning trade, and at Deutsche Bahn AG.

Major Differences Between Industries

There are also considerable differences between industries. At the lower end are the confectionery industry, the hotel and restaurant industry, and agriculture. Thorsten Schulten, head of the WSI Collective Agreement Archive, explains: "In den klassischen Niedriglohnbranchen wird in der Regel nur ein niedrigeres Urlaubsgeld gezahlt." According to the analysis, the range extends from 186 euros in agriculture in Mecklenburg-Western Pomerania to 2,904 euros in the wood and plastics processing industry in Westphalia-Lippe.

Vacation pay of over 2,000 euros is paid to employees in, among others, the paper, metal, and printing industries as well as in the motor vehicle trade. According to the WSI, there is also a uniform vacation pay in the printing and chemical industries. By contrast, in the banking sector and parts of the energy industry there is no collectively agreed vacation pay.

According to the WSI, there is no longer any independent vacation pay in the public sector: since 2005, it has been merged with the Christmas bonus into a single annual special payment in November. Employees of large companies overall have better chances of receiving vacation pay than employees of smaller firms, which are less frequently bound by collective agreements.

Gender Differences and Company Size

The gender difference is also striking: 38 percent of female employees receive vacation pay, compared to 49 percent of men. Schulten attributes this, among other things, to the fact that a disproportionately high number of women work in industries with low collective agreement coverage and low bonus payments.

The size of the company also plays a role: the larger the company, the higher the probability that employees will receive vacation pay. Smaller firms are less frequently bound by collective agreements, which has a direct impact on bonus payments. The decline in collective agreement coverage over the past decades is described as worrying by the WSI experts.

Overall, the analysis paints a differentiated picture of the German vacation pay landscape. While high bonus payments continue to flow in some industries, many employees – particularly in the East, in small businesses, and in classic low-wage sectors – remain without this additional benefit. The stagnation of the rate at 44 percent intensifies the debate over the declining collective agreement coverage in Germany.