Supply crisis on the horizon

Dumping wages and miserable working conditions for truck drivers

Report from the editorial office of german-foreign-policy.com

(18 November 2021) A supply crisis like the one currently in Great Britain is also threatening Germany and the EU due to the continuously increasing shortage of truck drivers. This is according to estimates by industry experts. In the United Kingdom, after initial difficulties in supplying supermarkets, the petrol stocks of probably two-thirds of all petrol stations ran out last weekend. Despite initial signs of recovery, the shortage continues.

Experts point out that there is a shortage of almost as many truck drivers in the Federal Republic as in the UK – and more are coming. This is also the case in the countries of Eastern and South-Eastern Europe, which cover a considerable part of the road freight traffic in the EU. The cause of the driver shortage is – as in the UK – dumping wages and miserable working conditions, with which in the EU generally mostly workers from Europe’s eastern and south-eastern periphery are compensated. Philippine truck drivers are quoted as saying that they found better working conditions in Saudi Arabia than in Europe.

No more reinforcement from Eastern Europe

In the UK, the shortage of truck drivers, which has been causing problems for some time, has led to major difficulties in the supply of petrol since last weekend. Failures to supply initially only a few petrol stations had triggered a wave of panic buying towards the end of last week, causing around two-thirds of petrol stations to run out of fuel and extreme queues to form outside the others. Industry experts predict an initial easing of the situation in the coming days.¹ However, the shortage of truck drivers remains, estimated at around 100,000 people, and affects not only the supply of petrol stations and supermarkets, but also industry. It is partly due to the Covid-19 pandemic; 25,000 fewer truck driving tests could be taken in 2020 than in 2019 due to the lockdowns.²

The main cause, however, are the deplorable working conditions, which deter younger people in particular; the average age is now reported at 55. Last but not least, Brexit is also having an impact: at the end of March, there were a around 16,000 fewer EU truck drivers registered in the UK than a year earlier. The option of recruiting new drivers from Eastern and South-Eastern Europe, which existed until the UK left the EU, is no longer available.

“Truck as place of residence”

A rapidly increasing shortage of truck drivers also exists in Germany and other EU states. For Germany, industry associations report a staff shortage of between 60,000 and 80,000 drivers. For Poland there is talk of up to 120,000. According to reports, the suspension of compulsory military service in Germany contributes to the causes to a certain extent: the German army (Bundeswehr) is reported to be training 10,000 truck drivers a year, only half as many as before.³ However, the main obstacles to recruiting new drivers in Germany are low wages and miserable working conditions. In practice, truck drivers are often separated from their families for several months, have to work numerous hours of overtime and spend the night in their cabs: “Trucks as place of residence, motorway gas stations as homes”, as a recent report put it.⁴ In addition, there is often enormous time pressure, illegal exploitation practices of the haulage companies as well as inadequate legal framework conditions with at the same time rather rudimentary enforcement of applicable laws by means of controls; excessive working hours, for example, are reportedly still frequently disguised by deliberate manipulation of the speedometers and all too often not detected.

Wage dumping as a cost advantage

It is possible to maintain wage dumping and miserable working conditions thanks to the EU. The conditions for this are created by the hardly changed prosperity gap in the Union in combination with the internal market and the free movement of workers. Thus, corporations from Germany are increasingly turning to services provided by haulage companies based in Eastern and South-Eastern Europe because wages and non-wage labor costs are considerably lower there; Western European haulage companies have also established offshoots in the Eastern and South-Eastern EU member states. A study commissioned by the EU puts the “cost advantage” of drivers based there at “more than 170 per cent”.⁵ According to the study, 62 percent of international truck freight transport in the EU – cross-border road transport as well as transport handled within one country by trucks from another country – is now carried out by vehicles registered in Eastern or South-Eastern Europe. Poland holds the top position by far with about 33 percent; Lithuania and Romania have a market share of about 6 percent, which is the same as that of Germany.⁶ In addition, the share of drivers from other European countries is also increasing for trucks registered in the Federal Republic of Germany – from barely 7 percent in 2012 to almost 20 percent in 2020.⁷

Built on low wages

The systematic exploitation of Eastern and South-Eastern European truck drivers worked because several countries in the region have succeeded in developing freight transport by road into a pillar of their economy. In Poland, for example, the freight forwarding industry already contributed around 6.5 per cent to the economic output in 2018.⁸ Transport services also serve the automotive industry, including suppliers, which has been able to increase its output – in terms of value – by 127 per cent to 27.85 billion euros (2019) since Poland joined the EU in 2004 and is now the second-largest sector of the manufacturing industry in Poland; the industry, which is dominated by German corporations such as Volkswagen, is absolutely dependent on road transport.⁹ The situation is similar in Hungary, one of the most important foreign locations of the German motor vehicle industry, which now handles 4 percent of all international truck freight traffic in the EU.¹⁰ The far-reaching commitment of the countries of Eastern and South-Eastern Europe to economically dependent activities with often poor pay and miserable working conditions sometimes leads to excesses that attract public attention. This applies not only to the situation of truck drivers from Eastern and South-Eastern Europe, but also to Eastern and South-Eastern European workers in German agriculture, in German slaughterhouses and in German 24-hour care (german-foreign-policy.com reported).¹¹

“With our eyes open into the supply chain collapse”

However, the shortage of truck drivers in Germany and Poland also shows that the system is reaching its limits. Polish haulage companies in particular have long since started recruiting drivers from countries east of the EU; after slightly more than 20,000 in 2015, their number already exceeded 65,000 in 2017.¹² Drivers have long since been recruited not only from Ukraine and Moldova, but also from Belarus or Kazakhstan, sometimes even from the Philippines. Nevertheless, the demand can no longer be met under conditions of wage dumping and miserable working conditions. This may also be because conditions are better elsewhere than in the EU: Filipino drivers, for example, report that they were treated better in Saudi Arabia than in Europe.¹³ With regard to the shortage of truck drivers in Germany as well, Dirk Engelhardt, spokesman for the board of the Federal Association of Road Haulage, Logistics and Waste Disposal (Bundesverband Güterkraftverkehr Logistik und Entsorgung), says that the “situation in Western Europe” will probably be the same as in the UK at the moment, “only with a slight time lag”: “We are warning that we are running into a supply collapse with our eyes open in Western Europe as well.”¹⁴

In the transition crisis

The UK, which has traditionally recruited low-wage staff from its former colonies, has also said goodbye to low-wage imports from Eastern and South-Eastern Europe with its exit from the EU. It is now in a transitional crisis, and it is not yet clear where it will lead to. Already in the summer, it was reported that first companies were offering truck drivers significant wage increases.¹⁵ Now the government is also pushing to pay drivers “more instead of just flooding the market with cheap labor”; it is thus coming into conflict with the industry, which depends on road transport.¹⁶ The disputes are continuing.

Source: https://www.german-foreign-policy.com/news/detail/8719/ on September 30^th 2021

(Translation “Swiss Standpoint”)

1 George Bowden: Petrol supply: Army will be delivering fuel in days – Kwarteng. bbc.co.uk, 29 September 2021.

2 How serious is the shortage of lorry drivers? bbc.co.uk, 28 September 2021.

3 Eva Fischer: Versorgungsengpass droht. Allein in Deutschland fehlen derzeit 60 000 bis 80 000 Lkw-Fahrer. handelsblatt.com, 22 September 2021.

4 Gerhard Schröder: Lange Fahrten für wenig Geld. deutschlandfunkkultur.de, 14 September 2021.

5 Regina Weinrich: Kostenvorteil bei über 170 Prozent. eurotransport.de, 2 March 2021.

6 Assessment of the impact of a provision in the context of the revision of Regulation (EC) No 1071/2009 and Regulation (EC) No 1072/2009. Final Report. February 2021.

7 Deutsche Verkehrs-Zeitung: Fahrerlöhnereport 2020.

9 Die polnische Wirtschaft. wko.at, 23 April 2021.

10 See: Im Interesse der deutschen Industrie und Europas industriell stärkste Region.

11 See: Bleibende Schäden (II).

12 Harald Schumann, Elisa Simantke: Das schmutzige Geschäft mit Lkw-Fahrern aus Osteuropa. tagesspiegel.de, 8 October 2018.

13 Gerhard Schröder: Lange Fahrten für wenig Geld. deutschlandfunkkultur.de, 14 September 2021.

14 Auch in Deutschland fehlen Lkw-Fahrer. tagesschau.de, 10 September 2021.

15 Dave Harvey: Brexit and Covid cause big jump in pay for lorry drivers. bbc.co.uk, 2 July 2021.

16 Edward Malnick, Daniel Capurro, Sarah Newey, Henry Bodkin: Boris Johnson demands pay rise for lorry drivers. telegraph.co.uk, 26 September 2021.