Germany, the Uberpimp?

While the British government is about to introduce legislation which, as a consequence of efforts to limit child abuse, makes it formally illegal for teenagers under the age of 16 (the age of consent in the UK) to engage in any mutually agreed sexual activity, including kissing or even hand holding, it could appear as if the German government were moving in the opposite direction. But that’s a complicated story. One that suggests the German government has decided to add a little fun to the otherwise joyless job market by mocking itself.


Run by the government?
Everyone who is familiar with the record of the current German government will probably remember that their initial reformist zeal quickly turned into a series of legislative and then economic disasters in the course of their first two years in office. In a truth-or-dare speech, Chancellor Schroeder even admitted this to the Bundestag a couple of weeks ago.

An important part of the problem in 1998 was that in order to be able to govern, the relatively weak Chancellor had to cut the SPD’s loony left’s influence within his Parliamentary party – epitomized by then SPD chairman and finance minister Oscar Lafontaine. So after beating the left with the stick by forcing Lafontaine to resign and assuming the SPD leadership himself, Mr Schroeder had to feed them some carrots, too. That is why the labour market became even more rigid in the first two years of the SPD government. A legacy still haunting the government. Yet history seems to be about to repeat itself.

Following his resignation from the SPD’s chairmanship in early February, it became quickly clear that the price for the left’s relative silence in the face of even mild deregulation would be a tax on businesses failing to employ a certain number of vocational trainees – a measure intended to reduce youth unemployment. However, by further increasing the cost of labour, such legislation would in all likelihood have an adverse effect not just on youth unemployment, while it would certainly increase the transaction costs of the German economy, not least by setting up a new federal agency of at least 600 employees, as some commentators claimed.

And as if this weren’t “funny” enough by itself, other ghosts of the past are now mocking the well-meaning interventionists, too: About three years ago, the coalition introduced legislation that made prostitution basically a job like all others.

Before, it was legal to engage in prostitution and buy sexual services, but it was illegal to promote prostitution. The latter was prohibited to ensure the punishability of exploitative pimps yet had the adverse effect that it was also illegal to provide prostitutes with services other than “protection”, say catering, if the catering service was also owned by the person or entity letting the rooms. The new legislation made the provision of sexual services a job like all others, allowing brothel owners to cater, but also to employ working girls.

However, beyond legalising activities like catering, the law, intended to allow sex workers to enter the public safety net as normal employees does not appear to have been particularly successful. While Ver.di, the giant service sector union, set up a working group to deal with the particular difficulties caused by employment contracts consisting of the employee’s obligation to perform a specified set of sexual services to a usually unknown client, it seems most prostitutes shook their heads in disbelief and continued to work as freelancers – a status that allows them to reject clients at will and, moreover, has significant (implicit) fiscal advantages in a largely cash-based business.

Strangely though, as Spiegel Online reports today (link in German), those brothels which are actually doing what the legislator intended and are actually employing prostitutes will now become subject to the proposed new “apprentice-or-tax” legislation, for it only concerns businesses with employees in the public social security system. And an exemption would be too difficult to manage, as the Ministry of Education – which is in charge of the operation – explains.

Does that mean that the German government is so desperate with respect to the structural lack of jobs in the German personal service market that it has decided to enter the pimping business and ask brothel operators to hire prostitute-apprentices? Not quite. Well, not yet, at least.

The process of establishing the regulation for a formal apprenticeship in Germany is one of the last remnants of corporatist, sort-of-guild-based decision making, and a science in itself. In an ever faster changing economy, it’s not uncommon that definitions are ready when the jobs have already disappeared. That, for sure, would not be a dominant concern with respect to the design of a vocational training scheme for the oldest business in the world.

But at the moment there is no formal apprenticeship for sexual services. Accordingly, for the time being the Ministry’s argument is correct that only the hiring of apprentices for officially recognized vocational training schemes, say waiters, or accountants, would allow to save the tax. That, and, of course, not formally employing prostitutes in the first place, as outlined above and as feared by the Greens. But I suppose the red light district will now try to hoist the government by its own petard and seek the official recognition of a vocational training for prostitutes – if only for adult apprentices.

I don’t think any Chancellor would like to be called “Ueberpimp” in the tabloids for promoting prostitution… But wouldn’t it be hilarious to read the employment agency’s apprenticeship- recommendations? Outgoing person? Like to work with people? Try this…

I wonder what Friedrich Hayek would have told these people.

This entry was posted in A Fistful Of Euros, Germany by Tobias Schwarz. Bookmark the permalink.

About Tobias Schwarz

German, turned 30 a while ago, balding slowly, hopefully with grace. A carnival junkie, who, after studies in business and politics in Mannheim, Paris, and London, is currently living in his hometown of Mainz, Germany, again. Became New Labourite during a research job at the House of Commons, but difficult to place in German party-political terms. Liberal in the true sense of the term.

His political writing is mostly on A Fistful of Euros and on facebook these days. Occasional Twitter user and songwriter. His personal blog is almost a diary. Even more links at about.me.

14 thoughts on “Germany, the Uberpimp?

  1. I may be a member of the aforemetioned “loony left”, but what actually would be so bad about prostitution as a job?
    Especially when you really make it a full job, with all that it entails, that is, social security, retirement and yes, apprenticeships?

    Making it a fully regulated job would probably cut out pimps pretty solidly, except for the kind of pimps we have in all other job segments, temp agencies and their ilk. If you don’t have gray areas, the true black market is also easier to get at and prosecute.

    Additionally, it should please the true liberals, who think that the state has no business to legislate morality.

  2. It sound somewhat similar to Victoria’s (the one in Australia) approach to sex workers. The government don’t want illegal prositution, since that is bad for the workers and has corruption issues, but they do not want to portray the work as ‘normal’ since that would really offend the more socially conservative elements. So we get these wishy-washy laws which don’t really address the real problems in the system.
    Hmm a similar thing happens with drug laws.

  3. I’m not quite sure what he problem is either. If most prostitutes are freelancers, then there can’t be very many big brothels subject to an apprenticeship tax. Where there are brothels of some size, I imagine that they actively seek out youth to employ since prostitution is well known to be a somewhat age-discriminatory business, where seniority is quite distinctly disadvantageous. So, I don’t think this is likely to be a terribly bothersome tax for them.

    I imagine that most legitimate German brothels operate a lot like translation agencies: They connect clients with suppliers, guarantee payment and working conditions, and extract a fee as a middleman. In that case, brothel employment is likely to be primarily in office work and the “catering trades” – scheduling, advertising, accounting and, of course, clean-up. I see no particular reason why brothels should be exempt from having to hire apprentice accountants.

    I think there is a responsible Hayekian position that would claim that distorting the labour market through make-work programmes is generally ill-advised. I don’t think this is universally true, but it might just be true enough here and now for government work. However, the flip side is that government that has to provide a safety net because employers won’t. That means high taxes. There is no alternative. Either private employers have to be mandated to provide employment, or else government has to provide financial security through income redistribution. During the post-war boom, the near universal consensus was that it was better to have full employment than to guarantee welfare because an economy at full employment was always more productive than one at less than full employment, regardless of the rate of inflation. I think there’s a decent case to make that that isn’t necessarily true anymore and that it would be better to have a deregulated and insecure job market and let the state centrally provide financial security. However, people who want freer labour markets have to understand that that means very high taxes on the people who most gain from flexible labour markets: employers.

    There ain’t no free lunch. The only real debate is whether taxation or mandating hiring is the more economically efficient way to make employers pay for public income security.

  4. Here in Britain, I can’t begin to tell you how so much safer I feel now that our government has at last made necrophilia a criminal offence with the very new Sexual Offences Act.

    On the other hand: “A growth in alcohol-fuelled incidents among young men saw violent crime rise by 11 per cent during the final quarter of last year. The increase is the latest hike in recorded violence and means violent crime against the person rose by 17 per cent during 2003, according to police figures. . . More serious violent crimes, such as murder and serious wounding, rose by 13 per cent, while ‘less serious’ violent crime, such as assaults, was up 21 per cent to 106,000 incidents. The number of sexual offences rose 6 per cent to 12,600. . . ” – from: http://news.independent.co.uk/uk/crime/story.jsp?story=516677

    Pity about that but then as Harold Wilson, Labour prime minister 1964-70 and 1974-76, said: “The Labour Party is like a stage-coach. If you rattle along at great speed everybody inside is too exhilarated or too seasick to cause any trouble. But if you stop everybody gets out and argues about where to go next.” – from: http://www.creativequotations.com/one/480.htm

  5. Scott,

    “However, people who want freer labour markets have to understand that that means very high taxes on the people who most gain from flexible labour markets: employers.”

    This presupposes a high degree of equality-of-outcomes. It is quite possible that an individual (i.e. moi) might be willing to see labor markets liberalized without any jump in either corporate or personal taxes, as long as said individual is willing to see the safety-net shrink a bit. To imply that the size of the net is in some way set in the firmament is incorrect. That doesn’t mean you have to _select_ a reduction in benefits from the menu available, but don’t pretend it’s an exogenous variable. There ain’t no such thing as a free lunch, but you can always go on a diet…

  6. But at the moment there is no formal apprenticeship for sexual services. Accordingly, for the time being the Ministry’s argument is correct that only the hiring of apprentices for officially recognized vocational training schemes, say waiters, or accountants, would allow to save the tax.

    I predict that the brothel owners affected will shortly band together to put together such a training scheme at lesser cost than the tax.

  7. Yes Bernardo, there is a third alternative: Con the public into accepting less security. That has worked – after a fashion – in the English speaking world. Since European voters and the governments they elect – outside the UK – seem reticent to live without their safety nets and have expressed that preference repeatedly, I assume it can be removed as a genuine option.

  8. The Hayekian case against the Aprentice-or-tax-law might go like this:

    The costs of hiring an apprentice in Germany vary wildly depending on industry.
    Generally, it is more expensive the more sophisticated the respective jobs are.
    The proposed tax/benefit-scheme of, say, 7.000€ for each apprentice will generally not be enough to make BMW hire additional apprentices (because BMW spends more than 7.000€ a year on an apprentice).
    For the barber shop around the corner, the matter is different: For the shop owner, an apprentice is basically chap labour and an additional 7.000€ are nice to have.

    The result of this calculation will be a major trend favouring low skill apprenticeships…

  9. “Yes Bernardo, there is a third alternative: Con the public into accepting less security.”

    ‘Tis not a _con_, my man. There are any number of reasons why a rational human being would choose a weaker safety-net. i.e. a low subjective estimate of lambda (the likelihood that said individual will get laid-off), a position in the income distribution high enough to make replacement benefits irrelevant, the knowledge that high levels of such benefits are counter-productive to society as a whole when given a high-turbulence economy, etc. You appear a might arrogant, to assume that those who make decisions contrary to your own have been in some way (to borrow an old leftist term of art) mystified. :^)

    Since European voters and the governments they elect – outside the UK – seem reticent to live without their safety nets and have expressed that preference repeatedly, I assume it can be removed as a genuine option.”

    To paraphrase Joe Biden, the European people have the right to be wrong. But a current reticence does not imply that it will always be so, or that the decision is in any sense correct. Past performance does not guarantee future results.

    ?I have always found the word Europe in the mouth of those politicians who were demanding from other powers something that they did not dare demand in their own name.? ? Otto von Bismarck

  10. No Bernardo, I just assume that it is impossible to have a civilisation where everyone is so rich that no one has to work.

    You’re telling me that people will rationally choose less state provided security because they have more security provided by other means – e.g., their own money. In short, it’s not a con for rich people. It’s still a con when you convince people to believe that their income is secure when the very essence of labour flexibility is that it isn’t. If they con themselves into believing that without prompting, then it is just stupid. I think you are perhaps a touch arrogant to assume that people are wrong in choosing – rationally as far as I can tell – to keep their security over hollow promises that only other people will ever need a safety net.

  11. “It’s still a con when you convince people to believe that their income is secure when the very essence of labour flexibility is that it isn’t.”

    Incorrect. Labor flexibility’s relationship to income insecurity is dependent on a number of variables, including skill levels, retraining opportunities, whether or not one is in a growing or dying industry, level of replacement benefits (and the effect on reservation wages thereof), technological turbulence, etc. You paint with an excessively broad brush. For what reason I can only guess…

  12. If you don?t have gray areas, the true black market is also easier to get at and prosecute.
    yes!

    Like, with prohibition in the US. Yes!

  13. Well, if HTML is permitted, this is easier:
    Women for Sale

    10 Reasons for Not Legalizing Prostitution

    Prostitution Research & Education

    Sex: From intimacy to ?sexual labor? or Is it a human right to prostitute?

  14. Scott and Bernard,

    For me, a free labor market starts with freedonm of the workers…

    All people residing on a nations soil should have the full right to work, as if they are citizens or legally residing …

    AND,if cities, parks, and land are not so regulated that newcomers (babies or foreigners) have no chance at reasonable accomodation, they will become free agents, and not sell themselves so easily to employers offering rotten jobs at rotten prices…but instead opt to employ themselves or go to school, thus greatly weakening the power of employers, and increasing wages. This scenario plays out best when capital, with all its transient nature, is made accountable for projects it undertakes, like moving families from a big city to an unfriendly environment to mine something, then reversing “field”, and shooting off to an underdeveloped country.