[3][4][5] A 12 wage implies a gross nominal monthly salary of 2,080 for a full-time employee, meaning someone working forty hours per week. [9], The minimum wage was one of the most controversial topics during the 2013 legislative election campaign. The minimum wage in Germany is set to rise in two stages from the current 12 to 12.82 per hour. Access your favorite topics in a personalized feed while you're on the go. 1, about 750,000 jobs earned below the minimum wage in 2016. Ger. In the latest ARD Deutschland Trend, the party reached 19% this week, the highest it has ever scored in this poll. Erforderliche Hhe des gesetzlichen Mindestlohns zur Armutsbekmpfung. The effects of the new statutory minimum wage in Germany: a first Betriebe reagieren nur selten mit Entlassungen. But employers conceded that while the minimum wage triggered these actions, it was not the actual reason behind these adjustments. Some professional groups are covered by other regulations. The first generation of so-called "guest workers" from Turkey in the 1960s were seen as exactly that: "guests" who were supposed to help the economy and then leave. And third, the lack of full compliance as suggested by the available empirical data means that all studies are limited to detecting effects resulting from the actual implementation degree, but do not show effects that would result if the minimum wage was implemented completely and in full compliance with the law. The two most relevant of these surveys, also used in the Mindestlohnkommission (2018) report are the IAB Betriebspanel (IAB Establishment Panel), a representative annual panel survey of some 16,000 companies across all industries, and the IAB Stellenerhebung (IAB Job Vacancy Survey), a representative survey based of around 75,000 companies and public authorities. Even when studies found any employment effectswhether positive or negativetheir size has been negligible in relation to the overall number of jobs. According to vom Berge et al. 2018). 21 states will see minimum wage increases by January 1 - CNN Germany is relatively new to the list of countries with a minimum wage. Springer Nature. This means that roughly 7.5 million jobs were low-wage jobs earning less than a gross 12.50 euros per hour. Scottish ceremony sees King Charles tread a thin line, Taylor Swift's Eras tour: Tips for getting tickets, The battalion of black women erased from history, Ruins found of Munich synagogue destroyed by Hitler, The fearless England captain who loves a dance, Cuba turns to old ally Russia to tackle fuel crisis, Anxiety and anger over Fukushima nuclear waste plan, The story of a unique sporting space trip, Catch a killer, become a killer - two conflicted cops face the dangerous power of desire. This is a major shift in policy for Germany. Google Scholar, Benassi, C.: The implementation of minimum wage: Challenges and creative solutions. But will all voters accept it? Companies, for their part, may raise the productivity of their workers by implementing organisational changes, offering training to improve efficiency, hiring more productive workers or moving towards more capital-intensive forms of production. Minimum wages in Belgium | Eurofound A reduction in working hours might also be initiated by employees to hold their monthly income stable while working fewer hours. Germany on the way to adequate minimum wages - Social Europe Anforderungen und Besetzungsschwierigkeiten gestiegen. This equivalence scale takes into account that the needs of a household grow with each additional member but not in a proportional way, as there are economies of scale, for instance, regarding housing size or domestic appliances. For additional information, click here . The first set of data comes from administrative sources such as the employment statistics of the BundesagenturfrArbeit (German Federal Employment Agency). States and other countries - that was spurred by the new minimum wage research beginning in the early 1990s. That ratio is the highest in Germany, with 2.8, whereas Poland has the lowest ratio with 1.1 . A household is seen as being at risk of poverty if its available income is less than 60 percent of the median income of the total population, both equalized according to the new OECD scale (for details, see Bruckmeier and Becker 2018).Footnote 4 Indeed, poor households are often those without employment. The panel includes every person who was in dependent employment or received unemployment benefits at least once. : What does the minimum wage do?. Part of While some studies still find significant negative effectsmostly limited to specific labour market groups, such as teenagers or low-skilled workersa consensus seems to have emerged among economists that, when set at an appropriate rate, minimum wages do not severely harm employment (Manning 2016, 2018; Dickens et al. Non-compliance remains a challenge for the implementation of the new statutory minimum wage. [2], Due to inflation, in December 2022 this wage was worth as much as 9.80 euros were worth in January 2015. Some employers criticized the increase, arguing that the government is interfering with long-established negotiations between employers, employees and unions to set compensation levels. Studie im Auftrag der Mindestlohnkommission (2018), Brown, C., Gilroy, C., Kohen, A.: The effect of the minimum wage on employment and unemployment. Inflation in Europe and the departure to work abroad forecasts for 2023, young people under 18 without professional education, apprentices on vocational training regardless of their age, long-term unemployed people for the first 6 months after the end of unemployment, teacher with a bachelors degree EUR 18.41, cleaning and interior maintenance 13.00 EUR, cleaning of facades and glass surfaces EUR 16.20, street cleaning (including the waste industry) EUR 10.45, for qualified carers-helpers (after a one-year course) EUR 14.60, for qualified carers and caregivers EUR 17.10, skilled construction worker EUR 15.70 (west federal states) and EUR 15.55 in Berlin, workers without qualifications EUR 11.40, skilled worker (with a professional diploma) EUR 13.80. 24(2), 145162 (2018), Burauel, P., Caliendo, M., Fedorets, A., Grabka, M.M., Schrder, C., Schupp, J., Wittbrodt, L.: Minimum wage not yet for everyone: on the compensation of eligible workers before and after the minimum wage reform from the perspective of employees. J. Ind. On the other hand, the number of people working exclusively in marginal part-time employment (Minijobs) decreased noticeably in January 2015. The author read and approved the final manuscript. Conservatives voted against the bill, outraged that the new law would allow some rejected asylum seekers already here to find work. Conservative-led governments in particular, including Angela Merkel's administration, struggled with the idea of a society open to migrant workers - despite the fact German society is increasingly diverse. The pattern of poverty risk is similar and illustrates the limits of the minimum wage as an instrument suitable for reducing the risk of poverty. If the longest working marginal employees move into part-time jobs, they will then tend to be the shortest working hours among the covered part-timers. AudioThe magical world of Walt Disney, Finding inspirational female ancestors. : Labor economics. PubMedGoogle Scholar. 2018). Although the evidence presented is based on robust, state-of-the-art methods, one has to keep in mind at least three caveats. Holiday Air Traffic Was Awful. [7], There remain exceptions to the wage minimum for workers on a traineeship, employees during their vocational training, volunteers, internships up to three months, young people and the long-term unemployed. German minimum wage to go up at least twice in 2022 The minimum wage in Germany is already increasing in two stages in 2022. Labour Econ. 2015). Since the minimum wage applies to almost all workers in Germany, this ideal-type approach cannot be applied. Ind. By January 2020 there will be another increase, to 9.35. Relat. 2018; Bruckmeier and Becker 2018; Pusch and Rehm 2017). Relative changes for part-time employees and marginal employees were similar.Footnote 6 The effect was mainly concentrated in the first year, with no further major changes in 2016 or 2017. This article has provided a review of the economic effects of the new statutory minimum wage in the first 3years after its introduction in Germany. Depending on the database used, either 750,000 or 1.8 million employees earned less than 8.50 per hour (with cautions regarding measurement issues for both figures). Germany's minimum wage is 12 per hour, pre-tax since 1 October 2022. This might also include a discussion of effective instruments to ensure better compliance, a topic for which international exchanges may be of particular interest (ILO 2017; Benassi 2011). The first minimum wage adjustment was made in June 2016, and was followed two years later by another adjustment, in June 2018, that raised the minimum wage to 9.19. Eur. New data: 2023 minimum wage hikes struggle to improve purchasing In addition, low wage earners do not necessarily live in households at risk of poverty. Note: Gross hourly wages without special or overtime payments. The author declares no competing interests. By using this website, you agree to our German Chancellor Olaf Scholz made raising the minimum wage a key plank in his election platform and, on Friday, lawmakers passed a bill increasing the minimum wage to 12 ($12.90) per hour as of October 1 an increase of 2.18 per hour. The exemption for the long-term unemployed has been evaluated by vom Berge et al. When it was introduced, about 11 percent of German employees earned less than that amount. 2009; 2017). Germany's minimum wage rate since its introduction. Some studies have found negative effects, others positive, still others no significant effects. The current national minimum wage is 9.82, with an increase to 10.45 as of July already in the books. 2016). Minimum wage in Germany - Wikipedia Against this background, minimum wages can help to increase incomes, thereby stimulating consumption, and also to make companies produce more goods and services and increase their demand for labour, and thus to increase employment (Herr et al. IZA Discussion Paper 11297(2018), Low Pay Commission: National Minimum Wage. It offers a rare, yet prominent example of a wage threshold being introduced nationwide in a large developed country. Privacy Am. In 2017, when the minimum wage had been raised to 8.84, this peak largely moved to the new threshold. 8.50 per hour ($9.47). The effects of the new statutory minimum wage in Germany: a first assessment of the evidence. The main reason why studies have not distinguished between full-time and part-time work may be that the publicly available aggregate data from the Federal Employment Agency, which has been used most often for the evaluation of employment effects, does offer this distinction. Ind Labor Relat Rev (forthcoming), Bossler, M., Grtzgen, N., Lochner, B., Betzl, U., Feist, L., Wegmann, J.: Auswirkungen des gesetzlichen Mindestlohns auf Betriebe und Unternehmen. Minimum wage in Germany - this is who is entitled to it! The overview provided by Neumark (2017) seems less clear-cut, however. Relat. It is thus hardly possible to calculate hourly wages even though some authors have imputed working time information from other data sources (see, e.g., Ahlfeldt et al. It attempts to provide a rather non-technical access to the findings available so far (for a more technical economics perspective, see Caliendo et al. Finally, we focus on the impact on businesses, including changes in working hours, consumer prices, productivity, profits and competition. WSI-Mitteilungen 70(7), 473481 (2017), Bruttel, O., Baumann, A., Dtsch, M.: The new German statutory minimum wage in comparative perspective: employment effects and other adjustment channels. New minimum wage in Germany | Move expert This corresponds to around 350 confirmations per month. In the restaurant and catering industry, around one-third of all firms had at least one employee earning less than 8.50 in 2014, in the food and consumption industry, as well as in retail, about one in four companies were directly affected by the minimum wage. The screened employers are selected through risk profiling, which means that controls were focused on employers which, based on characteristics such as company size, industry or past records, showed an above-average probability of violating the new minimum wage. 2018). Entwicklungen nach Einfhrung des Mindestlohns (Ausgabe 1). Germany's minimum wage is going up by 25% to 12 euros - CNN : Auswirkungen des gesetzlichen Mindestlohns auf Beschftigung. For another, the calculation of hourly wages based on weekly working hours and monthly earnings is a challenge. Thus far, both company dynamics and competition intensity have not shown noteworthy signs of change on the level of the economy as a whole or in the industries particularly affected by the minimum wage. Econ. At the moment, the country is one of seven in the 28-nation EU without a minimum wage level. The BBC is not responsible for the content of external sites. As in other countries, the minimum wage has not helped to reduce welfare dependency and the risk of poverty. This article provides a comprehensive survey of the existing empirical evidence on the effects of what is regarded as the most important labour market reform in Germany since the Schrder governments Agenda 2010 program in the early 2000s. Even though there have been wage increases at the bottom end, it becomes evident from Fig. 44, 2750 (2017), Schmitt, J.: Explaining the small employment effects of the minimum wage in the United States. 1). The difference-in-differences approach is the most common method for evaluating minimum wage effects. Germany to raise hourly minimum wage to 12 by October Chancellor Olaf Scholz's SPD party has slumped to 17%. Bundestagsdrucksache 19/3415 (2018), Dickens, R., Riley, R., Wilkinson, D.: A re-examination of the impact of the UK national minimum wage on employment. This does not imply that effects necessarily need to be very different during an economic downturn (Dolton and Bondibene 2012). IAQ-Report 2017-06 (2017), Koch, A., Kirchmann, A., Reiner, M., Scheu, T., Boockmann, B., Bonin, H.: Verhaltensmuster von Betrieben und Beschftigten im Zuge der Einfhrung des gesetzlichen Mindestlohns. Minimum wage of 12 euros: millions of people will benefit | Federal Data from employers are reported in various representative employer surveys by the Statistisches Bundesamt(Federal Statistical Office, Destatis): the 2014 Verdienststrukturerhebung (VSE) (Structure of Earnings Survey) and the 2015, 2016 and 2017 Verdiensterhebung (VE) (Earnings Survey).Footnote 2 While the VSE 2014 is a mandatory survey covering about 60,000 companies and a total of around 1 million employment relationships, the VE 2015 to 2017 are voluntary surveys with rather low response rates of between 6 and 14 percent, respectively, and only cover between 6000 and 8000 companies and between 69,000 and 76,000 employment relationships. Analyses of the German minimum wage can draw on a wide range of data sources (Mindestlohnkommission 2018; Caliendo et al. Further to the Minimum Wage commission's plan to regularly increase the minimum wage in Germany until July 2022, the next increase will take place from 1st July 2021 and will set the new minimum wage to 9.60 per hour: As of 1 January 2021: EUR 9.50. Though there is a wide range of potential channels, according to IAB Establishment Panel data, productivity, defined as business volume per employee, did not change in either 2015 or 2016 (Bossler et al. On the one hand, figures indicating wages below the statutory minimum wage do not automatically constitute actual violations of the Minimum Wage Act. 2015). As a result, average working hours in both groups would decline in the cross section. These inspections resulted in the opening of 5442 preliminary investigations on the violation of the Minimum Wage Act. In 2016 and 2017, wage increases in the aforementioned groups were more or less in line with overall wage development. Bericht der Mindestlohnkommission an die Bundesregierung nach 9 Abs. The relevance of changes in working hours to compensate for increased wage costs was also highlighted by the qualitative study conducted by Koch et al. There is a consenus among economists that minimum wages increase the wages of workers whose pay rates had previously been below the new wage threshold (Belman and Wolfson 2014). Additional insights on establishment-level adjustments to the minimum wage come from further surveys undertaken by the IAB. As 2022 begins, some states will enact pay bumps ranging from cents to dollars per hour. And with an increase to 12 per hour planned for autumn 2022, Germany might now find itself promoted from laggard to minimum wage trailblazer. J. Econ. Germany Approves Hike in Minimum Wage to 12 Euros From October Minimum Wages in Germany remained unchanged at 12 EUR/Hour in 2023 from 12 EUR/Hour in 2022. In the affected companies, on average, almost half of the staff earned less than 8.50 per hour (Bellmann et al. Read the article! Either way, the effects are small compared to the total number of jobs liable to pay social security contributions. 2014; Hafner et al. A second reason, related to the first, is that welfare dependency tends to be linked to a low number of weekly working hours rather than to low hourly wages. Listed below are all professions covered by the statutory minimum rate. As regards monthly gross wages, the effects are considerably weaker or non-existent. Accordingly, the decline in the number of Aufstocker in households composed of single people or couples without children ison a very low levelstronger than for single parents and for couples with children after the introduction of the statutory minimum wage.
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