Why is there a minimum wage 1

minimum wage

Old and new minimum wage 2018

The minimum wage commission had decided on June 28, 2016 to reduce the statutory minimum wage January 1, 2017 on 8.84 euros to fix. The Minimum Wage Adjustment Ordinance implements this decision and makes it binding for all employers and employees. This means that the statutory minimum wage has been increased by EUR 0.34 from January 1, 2017. Since, according to the law, the minimum wage is only adjusted every two years, there will be no increase in the statutory minimum wage in 2018.

Statutory minimum wage came into effect on January 1, 2015

Almost 4 million people in Germany benefited from the introduction of the new statutory minimum wage. It has been in effect nationwide as the lower wage limit since January 1, 2015, currently at a gross rate of EUR 8.84 per hour.

The coalition negotiations between the CDU / CSU and the SPD concerned the introduction of a statutory minimum wage. The SPD voted for a nationwide statutory minimum wage in all sectors, the CDU was against it. A compromise has been reached. The minimum wage law came into force on January 1, 2015. The regulation on the minimum wage is as follows:

A nationwide statutory minimum wage of EUR 8.50 gross per hour for the whole of Germany was introduced on January 1, 2015. Only minimum wages according to the Posted Workers Act (AentG) were excluded from this regulation.

For a transitional period, however, different regulations were initially possible through collective agreements, but only under strict conditions.

Deviations were permitted for a maximum of two years up to December 31, 2016 through collective agreements between representative collective bargaining partners at the industry level.

- From January 1, 2017, the nationwide statutory minimum wage will apply without restrictions.

- The collective agreements in force at the time of the conclusion of the coalition negotiations, in which the then applicable minimum wage level will be reached by December 31, 2016, remain in effect.

- For all those collective bargaining agreements in which the minimum wage level was not reached by December 31, 2016, the national statutory minimum wage applied from January 1, 2017.

- In order to safeguard current or temporary newly concluded collective agreements in which the applicable minimum wage level was reached by January 1, 2017 at the latest, the inclusion in the Employee Posting Act (AentG) had to take place until the end of the term.

The minimum wage law should be drawn up in dialogue with employers and employees in all sectors in which the minimum wage will take effect. Possible problems, e.g. B. in seasonal work, were taken into account in the implementation.

No minimum wage for volunteering in mini-jobs

The minimum wage regulation does not apply to voluntary work that is remunerated under the mini-job regulation. Reason: as a rule, this activity does not have the character of dependent and instruction-bound employment.

Why statutory minimum wage?

On the one hand, work has to secure existence. On the other hand, wages and productivity must be in a balanced relationship so that employment subject to social insurance is maintained. This balance is brought about by the social partners through collective agreements.

Due to ever decreasing collective bargaining coverage, fewer and fewer employees are reached by collective agreements. The introduction of a generally binding minimum wage has achieved adequate minimum protection for employees.

Who does the minimum wage apply to?

The minimum wage applies to all employees over the age of 18 in all sectors. Only if collective agreements were made in individual industries that are below EUR 8.50 could these continue until the end of 2016.

Exceptions: Who is exempt from the minimum wage?

There are exceptions to the minimum wage for people under the age of 18 without a professional qualification. The aim is to avoid young people looking for a job instead of starting (usually) less well-paid training. Long-term unemployed are also excluded. Anyone who gets a new job after at least 12 months of unemployment is not entitled to the minimum wage for the first six months. The incentive for employers to take on the long-term unemployed should be increased.

The minimum wage also does not apply to volunteers and interns in training. Even those who voluntarily do an internship that does not last longer than 3 months are not entitled to the minimum wage.

In detail here: Minimum wage exceptions

Info hotline

The Federal Ministry of Labor has set up a hotline on 030 60280028 and the DGB on 0391 4088003, where questions about the minimum wage can be answered.

Statutory minimum wage - 8.84 euros

According to current studies, around 13 percent of the workforce is currently working at hourly wages below EUR 8.84. Among women in employment in eastern Germany, the proportion was as high as 25 percent.

definition

Before presenting the arguments for and against a minimum wage, let us deal with the definition of the minimum wage. So what is a minimum wage?

Previous legal situation

When classifying the previous legal situation in relation to the minimum wage, the principle of collective bargaining autonomy guaranteed in the Basic Law takes center stage. This means that unions and employers are responsible for agreeing wage levels.

Current minimum wages in Germany in 2018

In Germany, many employees worked in companies bound by collective bargaining agreements, 57% in West Germany and 41% in East Germany. In these cases, the lower wage limit is determined by the respective collective agreements. Below is an overview of the current industry-specific minimum wages in Germany.

Minimum wages based on collective agreements, statutory ordinances within the meaning of the Posted Workers Act

Minimum wages are regulated in many collective agreements. A so-called declaration of general validity in the form of a statutory ordinance of the federal government makes them valid for the entire industry. Generally binding is not given in all branches.

Simple collective agreements

In Germany there are many non-generally binding collective agreements according to which hourly wages are below € 6. Around 4.6 million employees in Germany receive wages of less than € 7.50 an hour.

Hartz IV toppers

According to the statistics of the Federal Employment Agency (BA), there were an annual average of around 323,000 households with a so-called Hartz IV top-up, who received a gross income of more than 800 euros subject to social insurance. In 2009 there were around 20,000 fewer. The number of these single full-time or part-time jobbers dependent on Hartz IV rose in the same period by 38 percent to around 75,600. In total, around 1.3 million Hartz IV recipients were employed on average in 2012, about as many as in 2009. Around every second of them worked in a mini job.

According to a study by the Institute for Labor Market Research in Nuremberg, the statutory minimum wage hardly helps to top up. Around 60,000 of them will no longer be dependent on Hartz 4. Of the total of 1.3 million top-ups, only a relatively small part will be able to end the Hartz 4 reference through the introduction of the statutory minimum wage. The public budgets would, however, be relieved of up to 3 billion euros.
Because the top-ups usually worked less than 22 hours a week, most of them would still need Hartz 4 even after the introduction of the minimum wage. The average hourly wage of the Hartz 4 top-ups is currently 6.20 euros, well below the planned minimum wage of 8.50 euros per hour. The increase in income is not enough for most of them to get rid of Hartz 4 completely.

News on the subject of minimum wages

Changes to the record-keeping requirement for employers

Changes to the minimum wage law and less bureaucracy - these are the prospects that the Chancellor gave at the end of January 2015. Smaller companies in particular should be relieved of bureaucratic burdens. The documentation requirements for companies are to be weakened.

The Chancellor said that the federal government would look at the development for three months and then consider how bureaucracy can be cut if necessary.

The SPD and unions, on the other hand, want to maintain the strict rules. So a conflict is inevitable.

According to the ideas of the CDU, companies should in future have to specifically record the exact working hours for fewer employees. The currently valid ordinance of the Federal Ministry of Labor stipulates that recording must be made up to a gross monthly salary of 2958 euros. This particularly affects mini-jobbers and nine sectors that are particularly susceptible to undeclared work, such as the construction and catering industry. This limit is only reached in a few exceptional cases. According to the will of the CDU SME Association, it is to be reduced to 1900 euros. Furthermore, not all 450 euro jobbers should be affected.

The DGB stated that a restriction of the documentation requirement would not be a reduction of bureaucracy, but a game with fire. Without an obligation to keep records, the minimum wage makes no sense.

The minimum wage was in effect even before it was introduced

The nationwide statutory minimum wage in Germany that began in January 2015 had an impact even before it was introduced. That is what labor market experts from the union explain.

Last year, for example, the generally binding minimum wages in the sector were raised by between 2 and 14 percent in some cases. In 11 out of 14 industries with minimum wages, the lowest wage levels would already be above the amount of EUR 8.50.

In addition, in some areas of the economy that are at the core of low-wage employment, step-by-step plans have been agreed in order to achieve the legally required level throughout Germany. Examples are the meat industry, hairdressers and temporary work.

Negotiations are still in progress in the security industry, where there were recently minimum wages below the limit of EUR 8.50 in many tariff zones.

Minimum wage increased in 2017

According to the will of employers and trade unions, the statutory minimum wage should be raised for the first time in early 2017. This is now also stipulated by law and a year earlier than initially planned. Thereafter it should be increased regularly every two years in line with the development of collectively agreed wages. The year 2018 was previously set as the start of the regular increases. However, the minimum wages should then be adjusted annually.

criticism

The trade unions welcome the new legal regulation as a historic step forward. There are too many exceptions, however.

Employers, on the other hand, warned that negative effects could arise especially for low-wage earners. It is to be expected with job losses and practical problems in the implementation of the minimum wage. Above all, sectors with collectively agreed hourly wages below EUR 8.50 would be charged, which could not agree on a gradual adjustment to the minimum wage with the unions. This is the case in the hotel and restaurant industry and in the bakery trade. In particular, the handling of flexible working hours and the documentation requirements are much too bureaucratic. It should not be the case, for example, that a master craftsman would have to worry more about timekeeping than about generating orders.
In the long term, the minimum wage would cost a lot of jobs, according to the employers. Very few industries could translate the additional costs into higher prices. Especially those companies that are in international competition would have to cut jobs.