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Minimum wage is turning low-paid mini-jobs into regular work: report

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Minimum wage is turning low-paid mini-jobs into regular work: report
Photo: DPA
11:09 CEST+02:00
Germany only implemented a minimum wage two years ago, and analysts are still assessing its economic impact. But so far one aspect has shown improvement - and it especially affects women.

The minimum wage has played a strong role in converting low-paid mini-jobs into regular work positions, which is especially good news for women, according to a new report released on Wednesday by the Institute for Employment Research (IAB).

The number of mini-jobs converted into regular jobs was around 110,000 in 2015 when the minimum wage was launched, and this was more than double the number of conversions as in 2014.

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 earn around €5 to €10 per hour, while the minimum wage is currently set to €8.84, and they often do not receive the same kinds of benefits as permanent jobs. Mini-jobs can range from retail to healthcare to domestic work.

The jobs have been touted as a good opportunity for stay-at-home parents - mainly mums - as well as retirees and students. Proponents also have said it gives businesses more flexibility in their workforce.

But critics have observed that though the mini-job system is promoted as a stepping stone to the next position, it often does not have this result.

The minimum wage, however, appears to be shaking this up. According to the IAB report, mid-sized companies in particular decided after the implementation of the minimum wage in 2015 to turn former mini-job positions into regular job positions.

Women, the elderly and east Germans have profited from the changes above all others types of workers, the IAB found. Some though are still working part-time.

Companies specializing in transport and storage, as well as in the maintenance and repair of vehicles were the most inclined to turn mini-jobs into regular positions.

However, there was also another knock-on effect. Some firms who started employing mini-job workers in regular positions at the same time got rid of other normal working jobs.

The experts suspect that companies either placed former mini-job workers in regular positions that became free, or replaced weaker employees with more capable former mini-job workers.

Companies with relatively larger amounts of mini-jobs more frequently converted these positions. In addition, these companies created fewer new mini-jobs. The number of conversions itself did not have any additional effect on reducing marginal employment at companies.

“A little less than half of the conversions meant additional jobs subject to social insurance,” said the study authors in a statement.

A study by the Institute of Economic and Social Research (WSI) in January revealed that there could be millions of mini-job employees working too many hours, and illegally for too little pay.

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