Increase in low-wage ‘marginal’ part-time jobs

A March 2006 study by the Institute for Work and Technology provides a new insight into the presence of low-wage earners among part-time workers and ‘marginal’ part-time workers (those working less than 15 hours per week). It reveals that the rising number of low-wage earners in Germany is linked to regulatory changes in 2003, which brought about a rapid increase in marginal part-time jobs, so-called ‘mini’ and ‘midi’ jobs.

Background

While international comparisons in the mid 1990s classified Germany in the group of countries with a low level of wage dispersion, the European Commission’s 2004 employment report (742Kb, PDF) shows the proportion of low-wage jobs in Germany to be above the EU average. Opportunities for low-wage workers to obtain a better paid job are also shown to be below the EU average.

Research on the dispersion of low-wage jobs is commonly based on data of employees working full time. In Germany, employment trend analysis shows an above European average rate of part-time workers and an increase in female labour market participation, which is highly dependent on non-voluntary and voluntary part-time work (for further details, see Chapter 2 – ‘Profile of part-time workers’ – of the EWCO topic report on Part-time work in Europe; DE0308105F).

In terms of the legal framework, the 2001 law on part-time and temporary work provides for the same statutory rights of part-time and full-time workers (DE0504NU03). In 2003, the German government altered the legal provisions regarding so called ‘marginal’ (or short) part-time employment relationships, which enables the employer to conclude a low-wage employment contract for less than 15 hours per week that is not subject to unemployment insurance, health insurance or the statutory pension scheme. By increasing the salary level of “marginal” part-time workers from €325 to €400 for the jobs they carry out (so-called ‘mini jobs’) and by introducing a flexible salary of between €400 and €800 (‘midi jobs’), a rapid increase in marginal part-time jobs was initiated.

Previous research has shown that part-time work is more likely to be less well paid than full-time work. So far, however, no precise data on low-wage, part-time workers has been available.

About the study

In March 2006, the Institute for Work and Technology (Institut Arbeit und Technik, IAT) published a study on the extent of low wages among part-time workers and marginal part-time workers (340Kb PDF), as well as on the gender distribution and the qualification profile of low-wage earners.

The IAT study carried out by Claudia Weinkopf and Thorsten Kalina made use of the 2004 data of the Socio-Economic Panel (SOEP). The SOEP dataset allows the correlation of working time with hourly wages and is thus more appropriate to examine the extent of low salary levels among part-time workers than the federal statistical data base. It should be noted that SOEP data does not provide any information on the type of employment, whether it is on a full-time, part-time or marginal part-time basis.

The representative survey is based on the information provided by the survey respondents on their hourly wage and working time as defined by the employment contract or, if no data was available, on the working time indicated by the respondent. The survey focused on employees whose main or predominant form of income and employment is part-time work – defined as working less than 35 hours per week and liable to social security contributions – or marginal part-time employment. Nevertheless, certain population categories working part time were excluded from the survey, such as students, apprentices, persons in job creation measures, as well as self-employed, unemployed or retired persons.

Study findings

According to IAT findings, which are largely in line with the federal statistics, about 21 million out of the 29 million employed people in Germany work full time (72.1%), about 6.3 million work part time (21.6%) and about 1.8 million have marginal part-time jobs (6.3%).

The IAT study defines low wages as being two thirds below median earnings and therefore indicates an hourly gross wage of €9.83 for western Germany and of €7.15 for eastern Germany. On this basis, the survey results reveal that 20.5% of all full-time and part-time employees in western Germany are low-wage earners, as are 22.5% of all employees in eastern Germany. Some 40% of all low-wage earners receive an income amounting to 50% below the median earnings, which corresponds to 9% of all employees having an average hourly gross wage below €7.38 in western Germany and €5.37 in eastern Germany.

Extent of low salary levels among part-time workers

About 48.5% of all low-wage earners are part-time or marginal part-time workers, which can be explained by the fact that most people (85.8%) working in marginal part-time jobs have a low salary level. Moreover, some 21.1% of part-time workers liable to pay social security contributions earn low wages compared with a total of 20.8% of all German employees.

Table 1: Proportion of low-wage earners in relation to different employment types (%)
Proportion of low-wage earners in relation to different employment types (%)
  Percentage of low-wage earners in relation to all employees working in the respective category Percentage of low-wage full-time, part-time and mini job-employees in relation to all low-wage earners Percentage of full-time or part-time employees in relation to all employees
Full-time employees 14.6% 51.5% 72.1%
Part-time employees 21.1% 22.2% 21.8%
Mini job employees 85.8% 26.3% 6.3%

Notes: Data extracted from SOEP 2004 dataset and own calculations of Weinkopf and Kalina (IAT).

Source: IAT-Report 2006-03, Table 3, p. 7

Gender division among low-wage earners

While 29.6% of all employed women earn low wages compared with 12.6% of all male employees, the survey highlights some interesting differences. The gender gap is widest among full-time workers, with 21.8% of women earning low wages compared with 10.8% of men. The gender division declines among part-time workers due to an increasing proportion of men earning low wages: 21.9% of women working part time earn low wages compared with 15.6% of men working part time. Among marginal part-time workers, men are even slightly more likely to earn low wages than women.

Table 2: Proportion of low-wage earners, by sex and working time (%)
Proportion of male and female low-wage earners working full-time, part-time and marginal part-time jobs
Working time Men Women Total economy
Full time 10.8% 21.8% 14.6%
Part time 15.6% 21.9% 21.1%
Mini job 87.4% 85.5% 85.8%
Total economy 12.6% 29.6% 20.8%

Notes: Data extracted from SOEP 2004 dataset and own calculations of Weinkopf and Kalina (IAT).

Source: IAT-Report 2006-03, Table 5, p. 8

Impact of professional qualifications on earnings

According to the survey findings, professional qualifications have the greatest impact on earnings among full-time employees and the lowest impact among part-time workers. Even people with a university degree run a high risk of earning low wages if they work in a marginal part-time job.

Working time Without professional qualification Professional qualification University or college of applied sciences degree Total Economy
Full time 32.5% 15.1% 5.8% 14.6%
Part time 40.2% 22.4% 11.1% 21.1%
Mini job 88.7% 86.8% 75.8% 85.8%
Total economy 42.1% 21.5% 9.4% 20.8%

Note: Data extracted from SOEP 2004 dataset and own calculations of Weinkopf and Kalina (IAT).

Source: IAT-Report 2006-03, Table 4, p.8

Conclusion

The IAT study concludes that the expansion of low-wage, marginal part-time jobs in Germany is not restricted to low-skilled jobs, but involves jobs requiring various skills levels and women and men with various professional qualifications. The authors of the study underline that the majority of people working in mini jobs receive an hourly wage below the employment terms of full-time and part-time employees. They thus suggest that this employment practice – marginal part-time jobs – undermines the anti-discriminatory statutes of the law regulating part-time work.

Reference and further information

Kalina, T. and Weinkopf, C., ‘Mindestens sechs Millionen Niedriglohnbeschäftigte in Deutschland: Welche Rolle spielen Teilzeitbeschäftigung und Minijobs?’ [‘At least six million low-wage earners in Germany: What are the roles of part-time work and mini jobs?’], in IAT-Report 2006-03, March 2006.

For more information on part-time work at European level, see the EWCO topic report Part-time work in Europe (TN0403TR01)

Birgit Beese, Institute of Economic and Social Research (WSI)

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment