The minimum wage is an issue in the election campaign. The SPD and the Greens want to increase it to twelve euros, other parties do not. But who would actually benefit from it? A new study shows that there are certainly surprises here. And that women can expect more money than men.
Since July, a minimum wage of EUR 9.60 (after 9.50) per hour has been in effect in Germany. No employer is allowed to pay less, except in exceptional cases, such as to certain interns or initially to people who have been out of work for a long time. According to the recommendation of the independent commission set up by the government, the minimum wage should rise in further stages to 10.45 euros by mid-2022. With the current 9.60 euros, someone working full-time comes to around 1600 euros, before deductions. Those who have to pay rent alone in cities often have a problem. It is also becoming financially tight for other employees.
Who exactly benefits when the SPD and the Greens prevail, demanding twelve euros an hour in the election campaign? First of all, there are astonishingly many: up to ten million German citizens who earn less today. That says Labor Minister Hubertus Heil (SPD), who is based on data from the Federal Statistical Office and scientific findings. And there are possibly more. Because a higher minimum wage also benefits some employees who are already earning a little more. For example because companies offer them more money so that they do not jump off when new offers arise as a result of the general increase in wages.
And which employees benefit directly because they get less than twelve euros an hour today? These are not just employees in restaurants or supermarkets who are known to be poorly paid. “Unfortunately, even a completed, multi-year vocational training course does not reliably protect against low-wage employment,” reports Malte Lübker, who reports the salaries of 200,000 employees for the Institute for Economic and Social Sciences (WSI) has evaluated. The result: Hairdressers, bakery salespeople and florists are far ahead of the 50 professions for which the most common payment is less than twelve euros. In other words, jobs that require three years of training. And then only moderately earned.
Other popular apprenticeships also appear: automotive mechatronics technicians or employees in medical practices, law firms, shops and company offices. “In other words, a lot of people who, because of their solid education, would have been part of the middle class in the past,” said Lübker. Previously? What has changed is that at the turn of the millennium, companies were paying more than two thirds of their employees according to collective bargaining agreements. Today only one in two people can benefit from the usually higher wages that a union-negotiated contract brings. The others slip, training or not, into poorly paid jobs more easily than before – and would benefit from a minimum wage of twelve euros.
According to a study, many mini-jobs would be eliminated
In general, no one is immune from earning little for a short or long period of time in their professional life, warns Lübker. But there are risk factors. One of them is clearly gender. Women have to put up with low wages more often, especially if they work part-time or only have a fixed-term contract. So more often than men they would be winners of a higher minimum wage. Those who work as helpers or have been trained also have a higher risk of low wages. Whose company has less than 100 employees. And whoever lives and works in the east or north of the Federal Republic. Correspondingly, if several of these factors apply, then often earn little.
At first glance, there are many profiteers from a higher minimum wage, as proposed by the SPD and the Greens – and also the left, which is even asking 13 euros an hour. But are there not tons of jobs lost with such a state-imposed wage increase, which is why those affected would not benefit from it at all? This question was at the center of the political discussion from the start. When the statutory minimum wage was introduced in 2015, market-liberal economists warned that this would cost hundreds of thousands of jobs. Which turned out to be completely wrong.
Nevertheless, an increase in the minimum wage to twelve euros is not a sure-fire success. Because the introduction back in 2015 coincided with years of good economic activity and falling unemployment figures. In 2020, however, the corona pandemic caused the second worst economic downturn in post-war history, from which the country will not fully recover until this year. There are still a few hundred thousand more unemployed than before the crisis.
Some economists therefore suggest that the minimum wage should be increased slowly to avoid job losses. Tom Krebs and Moritz Drechsel-Grau from the University of Mannheim come to more optimistic results in a new study. Accordingly, total employment would not decrease if the minimum wage rose gradually to twelve euros. Many mini-jobs with a maximum of 450 euros would be eliminated, but full-time and part-time jobs would be created.