Proportion of low wage earners increases

The proportion of workers on low pay in Germany has increased, according to a survey published in September 2012 by the country’s Federal Statistical Office. It found that 21% of employees received less than two-thirds of the average wage in 2010, compared to 19% in 2006. Among those particularly affected by low pay were taxi drivers, hairdressers, cleaners, and restaurant and bar workers. Workers covered by collective agreements were significantly less likely to be on low pay.

Background

In September 2012, Germany’s Federal Statistical Office (destatis) published a press release on the findings of its 2010 survey on the structure of earnings in Germany. The representative survey takes place every four years. The 2010 survey was based on the earnings of 1.9 million employees between the ages of 14 and 64 in establishments of 10 or more employees in the manufacturing and services sectors.

Excluded are employees in the agriculture, forestry and fishery sectors, as well as all those working in establishments with fewer than 10 employees. According to destatis, these employees receive, on average, lower wages than those covered by collective agreements. The agency therefore stresses that the proportion of low pay wage earners as shown by the survey marks the minimum level of low pay in Germany.

In accordance with international standards, low pay is defined as two-thirds of the median wage. The median wage divides all wage earners exactly in two, that is one half earns more and the other less than the median. The overall gross median wage per hour was €15.54 in 2010. The low pay threshold was therefore €10.36 per hour.

How collective bargaining makes a difference

According to the statistics, 20.6% of all employees working in businesses with 10 or more employees received low pay – that is, they earned less than €10.36 per hour in 2010. In 2006, when the low pay threshold was €9.90 an hour, the proportion of low wage earners was 18.7%.

On 10 September 2012, Roderich Egeler, President of destatis, commented on the results of the 2010 survey at a press conference in Berlin, saying: ‘With this increase, a rather long-term trend has continued.’

The survey shows collective bargaining makes a difference where low pay is concerned. Whereas in 2010, 11.9% of employees covered by collective agreements were low wage earners, the proportion among those not covered by collective agreements was 31%.

Particularly high proportions of low wage earners were identified among taxi drivers, hairdressers, those in cleaning jobs, those working in restaurants and bars, in food retailing and in call-centres.

Low pay was particularly widespread among employees who had what could be termed ‘atypical’ employment. Atypical employment, as defined by destatis, comprises four types of work:

  • part-time work of up to 20 hours per week;
  • fixed-term contracts;
  • temporary agency work;
  • so-called ‘mini-jobs’ or ‘marginal employment’, which can be defined as jobs not paying more than €400 a month.

A job is considered as ‘standard employment’ if there is a permanent contract, it covers more than 20 hours per week, and is performed neither as a mini-job nor as temporary agency work. In 2010, about 25% of employees had some form of atypical employment.

Table 1: Proportion of atypical employment among all employees in 2010 (%)

Type of employment

%

Atypical employment (all types)

25.4

Part-time with up to 20 hours

15.9

Fixed-term contracts

8.9

'Mini-jobbers’

8.1

Temporary agency workers

2.4

Note: An individual worker may fall into more than one category.

Source: destatis, micro-census

The median gross hourly wage of employees with some form of atypical employment was €10.36 in 2010 compared with €17.06 for those with a standard employment. Almost 50% of employees with some form of atypical job were low wage earners (Table 2). Within atypical employment the highest proportion of low pay was found among employees with mini-jobs. Within this group, 84.3% were low wage earners, compared with a proportion of 67.7% low paid among temporary agency workers, 33.5% among those with fixed-term contracts, and 20.9% among part-timers.

Table 2: Low wage earners according to type of employment, gender and bargaining coverage (%)
 

All

Standard employment

Atypical employment

All

20.6

10.8

49.8

Women

26.5

15.1

47.6

Men

15.8

8.1

53.7

Covered by collective agreements

11.9

3.7

38.3

Not covered by collective agreements

31.0

19.7

62.2

Source: destatis

Overall, 15.8% of men received low pay and 26.5% of women. In standard employment, women were almost twice as likely to earn low pay as men. However, those men who worked in some form of atypical employment were slightly more likely to be low wage earners than women.

Low wage can also be determined by sector and the degree to which the sector is covered by collective bargaining.

The proportion of employees not covered by collective bargaining and receiving a low wage was almost a third (31%), while among those working for employers covered by collective bargaining, the share was markedly lower at 11.9%.

In 2010, the proportion of low wage earners was particularly high among taxi drivers (87%), hairdressers (85.6%) and in the cleaning sector (81.5%). Other sectors with particularly large numbers of low wage earners were restaurants and bars (77.3%), washing and dry cleaning (73.6%), cinemas (73.5%), food retailing (68.9%) and call-centres.

Because certain industries and establishment sizes are excluded, destatis data do not make it possible to calculate the overall total number of low wage earners in Germany.

Additional data on low pay in full-time employment

An additional analysis of low pay (in German, 198Kb PDF) was commissioned by the Confederation of German Trade Unions (DGB). It is based on the official statistics on gross incomes recorded by the Federal Employment Agency (BA). The data, as of 31 December 2010, cover the gross incomes of employees in all sectors and workplace sizes. The data are, however, restricted to full-time employees who make social security contributions and do not allow for a calculation of hourly wages and are instead based on monthly gross incomes including supplements and benefits. These data allow for detailed regional differentiation.

In 2010, the overall monthly low pay threshold (two-thirds of the median gross monthly wage of €2,703) for full-time employees was €1,802. Based on this national threshold, the percentage of full-time employees on low pay is 22.8%, and this figure can be further broken down to 18.7% for western Germany and 40.1% for eastern Germany (including Berlin). The large proportion of low pay in eastern Germany is explained by the fact that overall levels of pay there are still significantly lower than in western Germany.

Whereas in western Germany the median monthly gross wage is stable at about €2,835, it is only €2,068 in eastern Germany, meaning that half of all full-time employees in the eastern Germany earn less than this.

The picture of low pay looks different if separate low pay thresholds for western and eastern Germany are calculated (Table 3) giving a threshold of €1,890 in western Germany and €1,379 in eastern Germany.

Table 3: Low pay among full-time employees by region (%)

Federal state/region

Western Germany (low pay threshold €1,890)

Eastern Germany (low pay threshold €1,379)

Baden-Württemberg

18.2

 

Bavaria

20.6

 

Bremen

21.8

 

Hamburg

19.1

 

Hesse

19.2

 

Lower Saxony

25.2

 

North-Rhine Westphalia

20.4

 

Rhineland-Palatinate

23.1

 

Saarland

22.2

 

Schleswig-Holstein

27.0

 

Western Germany

20.8

 

Berlin

 

15.9

Brandenburg

 

21.2

Mecklenburg-Western Pomerania

 

23.8

Saxony

 

23.0

Saxony-Anhalt

 

21.9

Thuringia

 

22.5

Eastern Germany

 

21.1

Source: Federal Employment Agency (BA); calculation DGB

When low pay thresholds are differentiated by region in this way, it can be seen that levels of low pay are similar in eastern and western Germany. The particularly low percentage of employees on low pay in the city state of Berlin is explained by the fact that the low pay threshold for eastern Germany is used for this calculation, even though a considerable number of employees in western Berlin receive wages well above the eastern German average.

Between 1999 and 2010, the percentage of full-time employees on low pay and liable for social security contribution rose in eastern Germany from 16.6% to 20.8%, and in western Germany from 17.9% to 21.1%.

Using the national low pay threshold, the total number of low wage earners among full-time employees was 4.7 million in 2010, and 4.3 million if the separate thresholds for eastern and western Germany are taken as the basis of the calculation.

Even within the low pay sector, wage differentials remain substantial, with some 5% of all full-time employees only earning a monthly gross wage of €1,000 or less, and further 5% earning between €1,000 and €1,300.

Heiner Dribbusch, Institute of Economic and Social Research (WSI)

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