How far does the money go if someone works full, but earns a maximum of 2284 euros a month? Gross, i.e. before all deductions? How someone can make ends meet financially depends on what they pay for rent and other things. One thing is clear: there are quite a few who have to try that. Day after day, month after month. In 2020 there were four million, almost one in five full-time employees. This is shown by a new study by the Institute for Economic and Social Sciences (WSI).
“Such a salary despite being full-time is poor,” says WSI researcher Eric Seils. “Those who are sole earners can hardly make a living from it, especially in areas with higher rents. And those who work permanently for this wage will only receive a very small pension.” A maximum of just under 2300 euros, which means that someone earns less than two thirds of the median gross wage. At this income limit the country is divided: into men and women, city and country, west and east, academics and people without qualifications.
There are already big differences between the professions. Anyone who is employed by the state, in a bank or car company, almost always earns more. Waiters, cooks and contract workers are completely different. In the catering industry, two out of three employees bring home less than just under 2,300 euros, even though they work almost 40 hours. In agriculture it is one or two people. Art and entertainment, logistics and trade are also often poorly paid above average. Social and health professions, on the other hand, rank close to the average.
The qualification also has a direct impact on the account. Academics rarely stay below the wage limit, but almost every second employee without a qualification does. In general, young people earn less. And gender also has an impact on salary. Every fourth woman earns poorly despite full-time work – for men it is only less than every sixth. This even leaves out all those employees who earn part-time (mostly not that great).
There is progress too. The ten-year economic boom up to the Corona crisis reduced the proportion of low-income earners somewhat. “Our analysis shows some positive tendencies,” says Helge Emmler, who also conducts research at the union-related WSI Institute. This is particularly helpful in the East. There, the proportion of low-income earners shrank from almost 40 to just under 30 percent. After all.
If you look at all districts and cities in Germany, earnings still drop steeply from west to east (see grafic). In Wolfsburg, the headquarters of the VW car company, there are hardly any poorly paid people. The highest proportion can be found in the Erzgebirge district. The wage data is not an estimate, but comes directly from the employers. You would therefore have to paint a correct picture down to the regional level, according to the researchers.
There is also a gradient between south and north. And between town and country. Industry, finance, knowledge and administration are mostly located in metropolitan areas. These well-paying employers are far less common in rural areas. Areas with many low-income earners can therefore be found in the west in the countryside, especially near the borders.
Those who live in the city usually earn more. But it doesn’t necessarily benefit from that, explains WSI researcher Eric Seils: “In regions with high rents, wages are usually higher. But that doesn’t necessarily mean more purchasing power for employees, because rents and prices eat up the higher wages, as it were.” This is especially true in the case of sharp price increases. Real wages, i.e. wages minus inflation, contracted significantly last year – for the first time in more than 20 years.
Purchasing power would increase with a minimum wage of 12 euros
What can be done for all the low-income citizens? Many would help if the new traffic light government increases the minimum wage to twelve euros as planned. “For those who have earned less so far, that usually means a wage increase of a good 20 percent – in one fell swoop,” says Robert Feiger, head of the IG Bau trade union. “People will use it to make necessary purchases for the household and buy things that they previously had to do without.” According to a study by the Pestel Institute, the purchasing power of employees is increasing by ten billion euros – every year.
Economists are also discussing models according to which low-wage earners would have to pay fewer social security contributions. In the end, they would have more left over from their manageable gross wages.
It would also help if more companies adhered to collectively agreed wages that generate higher incomes. In the mid-1990s, companies paid 70 percent of their employees in the West according to collective bargaining agreements. Today it is less than 50 percent. In the east, collective bargaining coverage has almost halved. “We want to strengthen the collective bargaining agreement so that fair wages are paid in Germany,” promises the Ampel coalition agreement. How exactly is that supposed to look? There is still no answer to that.