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Germany – A third could miss out on the minimum wage

28 January 2014

More than a third of low-paid workers in Germany could miss out on the proposed nationwide minimum wage because of exceptions being put forward by employer organisations and politicians, reports thelocal.de.

A minimum wage of €8.50 per hour is to be introduced in 2015, however research released yesterday by centre-left think-tank, the Hans-Bӧckler Foundation, found that two million of the five million workers, who otherwise would have their wages boosted, will miss out on the increases.

Horst Seehofer, head of the Christian Social Union (CSU), the Bavarian-based sister party to Angela Merkel’s Christian Democrats Union (CDU), said in December that seasonal workers and pensioners should be excluded from the scheme.

According to the report, such exceptions could turn the minimum wage into a ‘Swiss cheese’ policy and pose a serious threat to the job market. The proposed exclusions to the policy are; working pensioners, school and university students, marginal employees (those earning less than €400 per month or working fewer than 50 days/two months per year), and so-called mini-jobbers (those earning less than €400 per month and not working more than 12 hours per week).

Reinhard Bispinck, head of the Hans-Bӧckler Foundation’s Institute of Economic and Social Sciences (WSI) said that these exceptions would undermine the purpose of the minimum wage and could result in the creation of a new, distinct low-pay sector.

The study also warned that the plans run the risk of creating a system where employers deliberately replace minimum-wage workers with those who are exempt in order to cut costs.

It is estimated that more than half (56%) of ‘mini-jobbers’ and 52% of pensioners and students currentlyearn less than €8.50 per hour work across four industries: hospitality, retail, company support services, and services. The effect of the proposed caveats to the minimum wage policy could impact those sectors more than others.

Mr Bispinck added: “But the positive effects of a definitive minimum wage, without caveats or exemptions, have been well proven by successive academic studies. An across-the-board minimum wage is a useful tool to curb negative developments in wages and the job market at large. But it really does have to be for all types of employment.”        

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