Why the coronavirus crisis is hitting people with mini-jobs in Germany particularly hard

Why the coronavirus crisis is hitting people with mini-jobs in Germany particularly hard
Many people in Germany work mini-jobs, including in the hospitality sector. Photo: DPA
People working mini-jobs in Germany are facing major difficulties due to the pandemic, a new study says.

That's because they are not entitled to Kurzarbeit, the measure which tops up from government coffers the pay of workers placed on shorter hours by their employer, preserving the contractual relationship for the time when activity rebounds.

The employment rate for people who earn their main income from mini-jobs fell by 4.6 percent in March compared to the same month last year, according to a study carried out by the German Institute for Economic Research (DIW) on behalf of the Bertelsmann Foundation.

A mini-job is a position where the employee earns no more than €450 per month, allowing people to work fewer hours free of tax.

Mini-job employees often do not receive the same kinds of benefits as permanent jobs. The work can range from retail to healthcare, the hospitality sector to domestic work.

“The corona crisis is exacerbating the problems of the low-wage sector – especially for mini-jobbers,” said Jörg Dräger of the Bertelsmann Stiftung.

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“Without the safety net of the Kurzarbeit allowance, they are the first to suffer income losses or lose their jobs.”

Mini-jobbers do not pay unemployment insurance contributions so they are not entitled to shorter hours benefits like Kurzarbeit.

READ ALSO: Can Germany weather the coronavirus crisis without massive lay-offs?

To cushion the impact of future crises, the authors of the study recommend lowering the tax-free threshold for mini-jobs from €450 to €250. This would mean that more people would have to pay social security contributions, but would also provide better protection in times of crisis like this.

Call for more minimum wage controls

According to the study, the low-wage sector in Germany has grown by more than 60 percent since the 1990s: in 2018, more than a fifth of all dependent employees (7.7 million) earned less than €11.40 gross per hour.

With an average hourly wage of €8.40, a large proportion of them even received less than the statutory minimum wage, which is currently set at €9.35 per hour.

The evaluation estimates the number of those who unlawfully receive less than they are entitled to, at 2.4 million. The study called for increased controls to be carried out in order to make sure people are receiving enough pay.

Several sectors in Germany are plagued by low wages. In 2018, for example, more than half of the low-wage workers were employed in trade, the transport and food industry as well as in the education, health and social services sectors – all occupations that have been classified as 'essential' at least since the pandemic hit.

Since the mid-1990s, the number of people with intermediate or higher qualifications in the low-paid sector has risen by almost one million – the group accounted for around 40 percent in 2018.

And it's not guaranteed that people will leave the low-wage sector and move up into the higher salary brackets: according to a long-term study, every second employee in the low-wage sector is still there four years later.

Men, more highly qualified people and younger employees are more likely to make it to the top than others.

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