Germany: Storm over minimum wage and mini-jobbers

There has been much debate about the statutory minimum hourly wage of €8.50 in Germany since it came into effect at the beginning of 2015.

Most of the controversy surrounds the obligation to keep a record of employees’ working hours. Similar obligations already exist under the Act on Working Time and the Posted Workers Act, but now also cover workers in non-standard part-time employment, so-called 'mini-jobbers'. They are allowed to earn a maximum of €450, with social security contributions paid by the employer. However, employers say that having to keep records of the hours for workers earning less than €2,958 a month is unreasonably bureaucratic. The Christian Democratic Union (CDU) wants such documentation to have an income threshold of €1,900, with a threshold of €450 per month for part-time jobs.

The Confederation of German Employers’ Associations (BDA) say employers’ liability for subcontractors is an even bigger burden than the documentation obligation. However, the DGB argues that documentation obligations are not new and are already part of the Act on Working Time.

The minimum wage has also been criticised by Polish and Czech employers’ associations who did not want to pay the rate to foreign drivers in transit through Germany. This has led to this part of the Act being suspended while the issue is clarified at European level.

According to the Federal Employment Agency, 4.4% of employees receive the statutory minimum wage. The agency thinks that the introduction of the Minimum Wage Act is at least partly responsible for a 2.4 % decline in marginal part-time work (mini-jobs). Some 4.86 million workers had a marginal part-time job in 2014 but the KBS, the social security organisation in charge of mini-job registration, reported that this number had fallen by 3.5% in the first quarter of 2015.

The Institute for Employment Research, part of the Federal Employment Agency, says data from the employer survey, the IAB Establishment Panel shows 12% of all establishments ought to implement the Minimum Wage Act since they employed at least one worker earning below €8.50 per hour in 2014 (in German, 1.14 MB PDF). However, these data do not cover mini-jobbers and so are likely to underestimate the total number of workers who have this type of employment.

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