The new Statutory Minimum Wage in Germany

Transcription

1 The new Statutory Minimum Wage in Germany Dr. Gabriele Sterkel, United Services Union (ver.di) National Minimum Wage Symposium at the University of Witwatersrand, Johannesburg, 2nd and 3rd of February 2016

2 Outline Background Economic situa1on/ impacts? Growth, employment, wage development The minimum wage law and the problems of implementa1on excep1ons, avoidance strategies, control Procedure of adap1on and the commission Valua1on and perspec1ves

3 The short story of German statutory minimum wage One year of Experience with the NMW In January 2015 the German minimum wage law establishes 8,50 /h The NMW is enormously successful S1ll growing economy, less unemployment, more and beqer jobs, up to 20 percent higher salaries there, where they were needed most ater ten years of figh1ng First only the service unions ver.di and NGG (hospitality, food) Big campaign against working poverty and for a living wage Finally 2006, the whole confedera1on (DGB) campaigned for a NMW Why that late? Since the 90ies growing inequality and low wages Strong support from public opinion Early opinion polls: percent approval (all par1es)

4 Then and now: strong opposing forces Since the start of the discussion about a NMW Massive media campaign of most economic and poli1cal organiza1ons, economic research ins1tutes, mass media Horrible economic forecasts: collapse of the whole economy with up to two million job losses Now, six months bevore the decision on the increase of the NMW Reality shows that the prognosis was completely wrong A cause for apology? No, s1ll too early to see the expected effects. ATer the immigra1on of more than one million refugees: new campaign to reduce or to split, or even to abolish the NMW

5 Economic situation: solid economic growth continues - also productivity and aggregate demand. (below: GDP) development)

6 Economic impacts: in contrast to many forecasts no job losses but booming labour market! Employment growth Never more employees in Germany than in December 2015 Increase also in the work volume New regular jobs with social insurance obliga1on about more regular jobs in the last year Less irregular jobs ( Minijobs : up to 450 monthly, no social ensurance, no tax for employee but low tax for employer) Decrease of about marginal jobs The half of them is now regular

7 Employment: the positive trend continues (below: development of employment)

8 Higher salaries with the NMW: Who is affected? About 5 million employees have higher salaries now That means: more than 15 percent of all employees in Germany Special personal features: Gender: men 10%, women more than 20% Age: under 24 and over 66: more than 40%, others only 10% Skills: unskilled 30% Contract: fixed term contract 30%, unlimited 10% Small differences of 3% between direct, indirect and not migrants

9 Higher salaries with the NMW: structural differences regional The regions in Germany are very unequaly concerned Eastern Germany 20-30% of all employees are affected West 10-15% sectoral The service sectors are much more affected Hospitality about 50%, agriculture 30%, retail trade 30% transport 20%, other services 20%, health 15% construc1on 7% Size of the enterprises the smaller the company the more concerned From 8% in companies over 2000 emloyees up to 42% in companies with less than 5 employees but no closures or job losses

10 Employees affected of NMW and company size classes 10

11 effects on public finances + economy generally It is too early for a valid analysis, but it is obvious, that the minimum wage causes very posi1ve effects for our social security system Less workers with addi1onal social benefits Different research ins1tutes es1mate between and workers do not need addi1onal social benefits any more Unemployment benefit II About 900 millions less expenses for the na1onal work agency taxes More tax income for the government domes1c demand Actually the growth in domes1c demand is considered as the main reason for the macroeconomic stability in Germany

12 New statutory provisions since January 1st 2015: Law to strengthen free collective bargaining => law on a national minimum wage => legislation to facilitate the extension of collective agreements

13 Law to strengthen free collective bargaining A general statutory na1onal minimum wage of 8,50 /h from Jan 2015 Possibility of devia1on through ca extended and generally binding Excep1ons 1l the end of 2016 in some few branches some employee groups are not covered by the minimum wage: trainees, young workers under 18, long term unemployed during the first 6 months of work and volunteers Special provisions for newspaper deliverers and seasonal workers Establishing a minimum wage commission with three representa1ves each from the employer and trade union sides, two academic advisors and a chair The commission will make proposals to the relevant minister for changes to the mw every two years; first proposal will take effekt from January 2017

14 Information and control to what extend employers apply the law correctly? Hotlines to give advice to the workers and employers at the minister of labour and at the DGB confedera1on as well Thousands of calls and e- mails with ques1ons and reports about abuse as well The ins1tu1on of control is the customs (minister of finance) Control of enterprises only 300 problema1c cases The non applica1on of the law can be punished with up to half million and exclusion from public assignments The customs has not enough contollers for this new task in general is es1mated, that the compliance of the employers is rela1vely high (IAB labour market reseach of the government)

15 Problems of implementation?! Addi1onal wage benefits How addi1onal wage parts (f.e. yearly benefits) have to be calculated? Working 1me ques1ons Problems with the defini1on of working 1me Dispute about compulsory documenta1on of working 1me Polemics about monsterous bureaucracy Obliga1on limited up to about monthly Without the documenta1on documenta1on of the working 1me, the control of the minimum wage is not possible!

16 How employers try to avoid/ escape the minimum wage? Less addi1onal salary components The main problem Earn more and work more Higher performance requested, more pressure Unpaid addi1onal working 1me New contracts with less hours Illegal selfemployment Taxi, waste branch, voca1onal training Unpaid emergency servicees f.e. in hospitals Less holidays...

17 Rules for developing the statutory minimum wage and the relative value of 8,50 The minimum wage commission has limited freedom of decision the average of collec1vely agreed payraise has to be the orienta1on for the minimum wage commission At the moment this is 3% for 12 months the adap1on to January 2017 will lead to a minimum wage of less than 9 ver.di demands now a minimum wage of 10 The average wage is at about 25 h The limit for addi1onal social benefits is at about 11,50 poverty wages lower than 50% of average 12,50

18 The minimum wage approach of the German trade unions is integrativ multi focused Campaign in favour of a statutory minimum wage No wage lower than XX per hour Branch level minimum wages ater the posted workers law Collec1vely agreed and extended by the minister of labour then generally binding in the branch (in about 20 branches) Minimum wages in public procurement Collec1ve bargaining rules in ver.di No wage lower than XX in our collec1ve agreements Installa1on of a permission procedure European minimum wage policy In every country minimum wages should arrive at 60 % of median

19 NMW per hour and as shares of median in the EU

20 Bilance and perspectives various approaches and reflections: Is this NMW a big success for the trade unions? Yes and no: Too low, must be at least a wage floor for everybody No new members directly, but beqer reputa1on The NMW is always to be defended Implementa1on is a longer procedure... experience and evalua1on Public opinion is on our side 94% of the ci1zens like smw Living Wage campaign?! Out of the poverty zone Minimum wage and collec1ve bargaining Main emphasis on cb now? Successfull interac1on; campaign led to beqer agreements I ll come back to this point tomorrow 20

21 Thank you!