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Germany — Low wages and high benefits encourage temporary employees to stay in bed

09 February 2010

A new exclusive research report for German daily Frankfurter Allgemeine by the Karl-Brauer-Institut, the research arm of the Federation of German Taxpayers (Bund der Steuerzahler), reveals that temporary employees and employees in the hotel/restaurant business, the security sector and gardening/agriculture may as well stay at home and live on social security benefits because they are equally or better off that way.

This is particularly the case for families with children because child benefit pushes the normal social benefits so high that low-paid temporary employees and others are almost as well off when they don't work.

The report was published just before the Federal Constitutional Court (Bundesverfassungsgericht) meets today to look into how appropriate the current levels of social security and other benefits are. Should the Court decide that benefits need to be raised further, hundreds of thousands of temporary employees and other low-paid workers might indeed decide to stay at home and just collect benefits.

The Scientific Institute of the Federal Labour Agency (BA) estimates that 200,000 low-paid workers such as some temporary employees would simply retire from the national workforce if benefits were upped because going to work is not worth it anymore.

There is also concern that new legislation brought in by a previous government under Chancellor Schroeder, which enables employers to pay very low wages, which are upped with housing and other benefits in order to bring low-paid employees above the poverty line, has created a culture of paying less and less to low-paid employees because the government will top it up anyway.

Hans-Jurgen Urban, Board Member of German union IG Metall, told Frankfurter Allgemeine "we really must stop the very fast expansion of the low-paid sector in this country. When the government pays a top-up to low-paid employees [to take them above the poverty line], the government encourages employers to pay very low wages. The tax payer subsidises poverty salaries that way."

To read the comparative table, in German language, on low-paid and normal paid workers in different industry sectors please click here



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