Instituting Cheap Labour in High Cost Countries - the Case of the German Meat Industry

Considered as the main destination country for labour migration within the European Union, Germany has been facing various forms of labour migrants that temporarily and permanently enter the labour market and challenge its present form. Within the Varieties of Capitalism discourse, the German ‘coordinated’ system of industrial relations is characterised by a high level of coordination and institutionalised system of bargaining between labour and capital. At the same time, issues of pay gaps between domestic and migrant labour as well as labour exploitation of mobile labour have been raised by trade unions and the media.  Based on the case of the meat processing industry, the existing structures of labour mobility within the European Union will be presented and analysed, in order to show how in the presence of social partners and labour market regulations, EU legislation intended to reinforce the freedom of labour and services contributed to the growth of a comparative advantage based on low labour costs in Germany. The purpose of this paper is to elaborate on the question how in a country characterised as coordinated market economy with strong labour and capital representation and influence it was possible to create and maintain such a low cost labour market segment within a growing industry.