Due diligence law will help global systems competition, says German minister – EURACTIV.com
The EU Due Diligence Act to strengthen human rights, which is under ongoing debate, also has strong policy foundations and can be used to spread EU standards. EU in autocratic states in a context of systemic competition between the EU and others, German Labor Minister Hubertus Heil told EURACTIV in an interview.
With the upcoming negotiations on the current draft EU Sustainability Due Diligence Directive, Germany will advocate for as far-reaching legislation as possible, even in areas beyond the German Duty of Care Act. due diligence which will come into force in 2023. At the same time, the German government welcomes the adoption of the European directive on the minimum wage – although the country still has a lot of catching up to do in certain areas.
Hubertus Heil has been German Minister of Labor and Social Affairs since March 2018.
While negotiations on the Due Diligence Directive are still ongoing at EU level, what do you think are the key points and what do you expect from the law?
We support the Commission’s proposal because we believe that Europe as an economic and social model can prove that values and the creation of value are not contradictory. Furthermore, it is a matter of credibility that we do not build our prosperity and our business relationships in international supply chains on child labor or forced labor.
We have done pioneering work with our German Due Diligence Act. We want there to be clear rules and a level playing field for businesses in Europe too.
And we believe that it is necessary, after years of relying on voluntarism, to now establish a legal framework with which we can set binding rules for all which can also be implemented in practice.
Are there specific provisions where German due diligence law diverges from that of the EU?
I think we have the opportunity to develop common rules and strengthen access to civil compensation for those affected. Under international law, people whose human rights have been violated by an EU company also have the right to sue in EU courts. But in practice, this is a very complex undertaking because according to the rules of private international law, it is the law of the country where the damage occurred that applies.
If, for example, the rights of a Pakistani textile worker are violated by a German company, she can currently only sue in German courts under Pakistani law. The Commission proposal seeks to change this. In the future, the textile worker could sue for damages in German courts under German law. This greatly improves their access to legal recourse and is an important step forward.
Second, in addition to human rights due diligence, we also want to focus more on the ecological consequences of economic activity by significantly expanding environmental due diligence. The entire German government and I want this directive to be a success for Europe.
In many areas, the proposal for a European due diligence directive goes beyond the German directive, particularly with regard to the thresholds for the applicability of the law. Is this approach supported or, from a German perspective, are we working towards the thresholds also anchored in German supply chain law?
We want the new supply chain law to be SME-friendly and not force companies to do things they cannot do. Our concern is to develop an effective legal framework.
Is this new due diligence law in line with the ambitions of the European Commission to strengthen European sovereignty and make supply chains more resilient? Or does this law appeal more to the European foundation of values?
It’s both. We see that supply chains are fragile because of Putin’s war of aggression. This is why, in Europe, we must guarantee our sovereignty through a strategic economic and industrial policy. But we are also aware that economic areas that share political values need to cooperate more closely, for example on energy policy. Europe must take responsibility for the other economic regions of the world. German law and European supply chain law are based on this approach.
Is it difficult to diversify supply chains while making them more sustainable and value-based?
No, if you do it reasonably, they are not contradictory; they are mutually dependent. We don’t want to practice protectionism or set back world trade, but it’s about creating a reasonable basis. The aim is to ensure free and fair trade. This includes transparent value chains, sensible trade agreements that enable good and sustainable economic relations, respect for basic human rights and international conventions, and the guarantee of economic standards.
You have already mentioned the strategic underpinnings of the duty of care law. Does this also play a role in the international competition of systems, or is it above all a question of values?
It’s both. Europe is more than a single market; it is also a political community with values that tries to combine democracy, market economy and welfare state. We know that politically and economically we are in systemic competition with other states.
We face how we deal with other economic regions in South America, Africa and Asia. We have the task of building equitable partnerships with mutual benefits and not turning a blind eye to forced labor and child labor.
The European Supply Chain Bill will help us because non-European companies will also fall within its scope. In this way, companies from autocratic states will also be forced to comply with our standards if they want to do business in the EU.
The EU Minimum Wage Directive has recently been launched, with only Council approval still pending. What changes does Germany need to make here to adapt?
First of all, I’m very happy that it exists. During the German Presidency of the Council of the EU, the minimum wage directive was in focus, as well as the issue of supply chains, which we resolutely pushed forward.
What does this mean for Germany today? We have done our homework. Because in a few days, on October 1, we will raise the minimum wage in Germany to €12. This is in line with the EU directive, which sets a benchmark of 60% of the median income.
However, we still have some catching up to do on the issue of collective bargaining coverage, as the Directive stipulates that Member States must take national action if collective bargaining coverage is below 80%. In Germany, we are at 51%.
What to do here?
To strengthen collective bargaining coverage, we as the federal government want to ensure, for example, that federal public contracts are only awarded to companies that pay in accordance with collective agreements.
I am convinced that the directive will give us a tailwind for more collective agreements and better collective bargaining coverage in Europe and Germany.
After all, the minimum wage never represents more than an absolute wage floor.
Will there be some sort of action plan for implementation?
The fact that trade unions and employers negotiate wages and working conditions independently is a great asset in Germany. That is why we will talk to them about what they need to do to strengthen collective bargaining in Germany. As a state, we will create the appropriate framework conditions for this.
[Edited by Nathalie Weatherald]