A third could miss out on minimum wage rise

A third could miss out on minimum wage rise
The new wage rules are to begin next year - but the coalition is still working out the details. Photo:DPA
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 organizations and Conservative politicians.

A nationwide minimum wage of €8.50 an hour is due to be introduced in Germany in 2015.

But research released on Monday by the Hans-Böckler Foundation, a centre-left think-tank, found around two million of the more than five million workers who would otherwise have their wages boosted, would miss out on wage rises under plans to exclude certain sectors and workers.

Head of the Christian Social Union (CSU) Horst Seehofer said in December that seasonal workers and pensioners should be excluded.

According to the report, such exceptions could turn the minimum wage into a "Swiss cheese" policy – full of holes – and pose a serious threat to the job market.

The proposed excluded groups are working pensioners, school and college students, and so-called "marginal workers" or "mini-jobbers" who work one or more low-paid jobs with very short hours.

And the study, done by the Foundation's Institute for Economic and Social Science (WSI), found that of the 5.25 million workers who earned less than €8.50 per hour in 2012, two million come from the groups to be exempted from minimum wage under the proposals.

Even if the "marginal workers" were not exempt, the proportion of low-earners to be excluded would still be nearly a quarter, the study found.

WSI head Reinhard Bispinck said 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 to cut their costs.

And the effects could hit some sectors more than others, the report said.

Fifty-six percent of "mini-jobbers" and 52 percent of pensioners, school and college students who earn less than €8.50 per hour work in  the same four industries – hospitality, retail and company support services like cleaning and telemarketing as well as "general services" such as launderettes and hair salons.

But the positive effects of a definitive minimum wage without caveats or exemptions have been well proven by successive academic studies, Bispinck said.

"An across-the-board minimum wage is a useful tool to curb negative developments in wages and the job market at large," according to Bispinck. "But it really does have to be for all types of employment."

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