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One in 10 German workers earn below minimum wage

January 29, 2018

Some 10 percent of German workers earn less than the minimum wage, a new study has found. Opposition politicians and trade unions said the government should be ashamed that the three-year-old law was so poorly enforced.

Minimum wage
Image: picture-alliance/Sven Simon

Some 2.7 million people in Germany – 9.8 percent of the entire workforce – worked for less than the minimum wage in 2016, a new study released on Monday found. The results have drawn outrage from left-wing politicians and trade unions, as well as demands that the wage be better enforced.

Waiters, truck drivers, retail workers, and construction workers are particularly exploited by unscrupulous employers, the study, by the Institute of Economic and Social Research (WSI), reported. The WSI is affiliated with Germany's leading Trade Union Confederation (DGB), which represents some 6 million workers.

The researchers said that employers use a variety of tricks to get round the €8.84 ($11) minimum hourly wage: waiters are routinely required to work longer than their contracted hours, truck drivers are not paid for time spent taking breaks, while construction workers are employed on a "fake" freelance basis.

The study found that 38 percent of workers in the hotel and catering sector were working below the minimum wage in 2016, as were 20 percent in the retail sector, and 17 percent of food production workers. Unsurprisingly, the problem is particularly acute in companies that have no workers' representative organization or pay agreement in place.

The catering sector is particularly prone to minimum wage violationsImage: picture alliance/Bildagentur-online/Begsteiger

Poor policing?

Germany's blanket minimum wage was introduced in January 2015, and was seen as an important achievement for the Social Democratic Party (SPD), the junior partner in Angela Merkel's last coalition government.

It is policed by the financial control agency (FKS), under the aegis of the customs office in the Finance Ministry, which launched over 2,500 investigations in 2017 and fined companies over €4.2 billion last year, according to government figures released last week in response to an information request from the socialist Left party.

But trade unions and opposition politicians seized on the WSI figures to condemn what they considered government inaction over the minimum wage. "These figures should make all those employer representatives and politicians who were undeterred in their support for exceptions to the minimum wage blush," DGB board member Stefan Körzell told DW in a statement. "If they succeeded, it would be no less than a legitimized invitation to commit fraud!"

Körzell went on to say there was only one way to combat "criminal employers:" "Every working hour needs to be properly documented, every company effectively checked," he said. "That's why we urgently need the promised personnel in the financial control agency."

Tip of the iceberg

The socialist Left party leader Bernd Riexinger made a similar point, tweeting, "My question to the government on minimum wage violations: 2,521 violations against the minimum wage in 2017. That is just the tip of the iceberg. Especially tricks for unpaid on-call services, deductions for work material, and much more. We need more checks!" 

The Left party has also demanded that the government employ 5,000 new officials specifically to police the minimum wage, though many consider this an unrealistic figure - the government has promised to engage a further 1,600 by 2019.

A spokesman for the German customs agency told DW that this increase in personnel represented "a strategic prioritization of this task," and that since 2015 new recruits were being channelled into the FKS. He added that the FKS "well-staffed and works successfully. The quality of checks and investigations has continually increased in the past few years."

The SPD has previously said that it favors other options as more effective means against minimum wage violations – such as giving unions the right to bring criminal suits against employers. But the party was unable to pass this measure.

Some success

The WSI study also said that Germany's new minimum wage had also been a success, ensuring that many low-paid workers had seen a pay rise, meaning fewer workers were dependent on state benefits to earn enough to live on. However, the study also pointed out that the minimum wage was actually below the living wage. The poverty rate among workers dropped by 2.7 points to 17 percent in 2016, the study said.

In a statement to DW, the German Labor Ministry said that the introduction of the minimum wage had "basically been a great success." The ministry also called the study's stats into question, pointing out that official government statistics, based on companies' own data, said "between 750,000 and 1.1 million German workers" were earning less than the minimum wage. Nevertheless, the study showed that "checks on the basis of documentation remain an important element to give the minimum thorough validity."

The SPD is currently engaged in new coalition negotiations with Merkel's Christian Democratic Union (CDU), and the Social Democrat leadership is under considerable pressure from its left-wing to get more concessions. The party's labor policy spokeswoman Katja Mast, who is involved in the negotiations and was not available for an interview, told DW by email, "I find the fatal attempts by the CDU and other parties to weaken the minimum wage outrageous. In the future only more checks and better employee powers will help."

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Benjamin Knight Kommentarbild PROVISORISCH
Ben Knight Ben Knight is a journalist in Berlin who mainly writes about German politics.@BenWernerKnight