Fight against undeclared work: minimum wage often remains unheard of!

Fight against undeclared work: minimum wage often remains unheard of!

On June 16, 2025, the Institute for Work and Qualification (IAQ) reported on the precarious situation of employees in Germany, which affects around two million employees despite the legal right to a minimum wage. This group primarily includes mini-jobbers, contract workers, temporary workers, bogus self-employed people and illegal workers, especially in the construction industry. Many of these people are not aware of their rights or do not dare to claim them, which further worsens their economic situation. Such grievances were uncovered through comprehensive controls by the Financial Control of Undeclared Work (FKS), which found violations of the minimum wage regulations in more than one in four companies uni-due.de reported.

The challenges for the FKS are considerable, as detecting violations becomes difficult in confusing subcontractor chains. To address these issues, the IAQ has developed a comprehensive minimum wage enforcement reform proposal. In this context, the Bundestag plans to increase funding for the FKS and introduce digital data analyzes in order to record the extent of the violations more effectively. The plan is to evaluate wage and employee data from the pension insurance as well as wage reports from the Federal Employment Agency and financial data from the tax authorities.

Measures to combat undeclared work

As part of the reform proposals, Prof. Dr. Gerhard Bosch from IAQ made it clear that new laws and additional staff alone are not enough to uncover wage violations. What is necessary, among other things, is a nationwide, data-supported risk analysis as well as mandatory and tamper-proof digital working time recording. In addition, closer cooperation with customs investigations and a reform of training for the investigative services are considered necessary.

As the FKS shows, the problem of undeclared work and illegal employment is not new. During a nationwide audit on March 13, 2025 in the Osnabrück region, the focus was on compliance with the minimum wage. These inspections identified numerous violations and 26 issues requiring further investigation in various sectors, including retail and catering. Particularly worrying was the suspicion of non-payment of the minimum wage in six cases. This information reported Zoll.de.

• Die Ergebnisse der FKS-Prüfung umreißen die Schwere der Lage:
• Verdacht auf illegalen Aufenthalt in einem Fall
• Hinweise auf Sozialleistungsbetrug in einem weiteren Fall
• Unregelmäßigkeiten in der sozialversicherungsrechtlichen Meldung in zwölf Fällen
• Vermutete Beschäftigung von Ausländern ohne Arbeitsgenehmigung in sieben Fällen

These results show that the incomplete recording of wage claims and the widespread false self-employment in Germany are potential elements of white-collar crime.

A look at the impact of the minimum wage

The introduction of a nationwide minimum wage in Germany in 2015 was aimed at improving the income situation of many employees. This has already been adjusted several times and was 12.82 euros gross per hour from January 1, 2025. However, previous analyzes have focused primarily on the employment and wage effects of the minimum wage, while the connection between the minimum wage and the extent of undeclared work has not yet been sufficiently examined bmas.de proven.

Undeclared work is particularly widespread in specific sectors, such as the hospitality and construction industries. Empirical research shows that the industry structure and employees' motivations offer more valid explanations for the phenomenon of illegal employment than the minimum wage itself.

In summary, it can be said that comprehensive measures are necessary to combat undeclared work and illegal employment, which include both legal adjustments and targeted controls and educational work. The aim of all measures is to protect the rights of employees and to combat organized crime in a targeted manner.