Low wage risk in Germany: Pleasing declines and new challenges!

Low wage risk in Germany: Pleasing declines and new challenges!

There are positive developments in the German labor market with regard to the low wage rate. Current analyzes by the Institute for Work and Qualifications (IAQ) at the University of Duisburg-Essen show that the risk of receiving a low wage in Germany fell by almost two percentage points to 19% between 2021 and 2022. The main reason for this decline is seen in the increase in the legal minimum wage to 12 euros in 2022. This measure has a noticeable impact, particularly in West Germany, where the low wage risk has fallen from 19.9% ​​to 17.9%. These evaluations come from the work of Dr. Thorsten Kalina from IAQ and form the framework for the comprehensive research work on this topic. uni-due.de

A significant finding of this research is the decline in low wage risk across different employee groups. While the risk in Germany fell from 20.9% to 19% overall, it remains to be seen that certain groups, such as migrants and temporary employees, also benefited from a reduced risk of low wages. On the other hand, the decline among low-skilled people, women, younger people, older people and mini-jobbers was below average. In contrast, highly qualified people as well as men and employees subject to social insurance contributions experienced an above-average reduction in the risk of low wages.

A review and future challenges

The peak of low-wage employment in Germany was determined between 2009 and 2011, with a share of around 24%. A decline in low-wage employment has now been recorded for the first time since 2018. However, it remains unclear to what extent a further increase in the minimum wage can further reduce the range of low wages. Labor market researchers point out that collective bargaining agreements have a more significant influence on low-wage employment than the level of the statutory minimum wage. An expansion of collective bargaining coverage is therefore recommended as an important step towards reducing the low-wage sector. socialpolitics-aktuell.de

In addition, an evaluation of the current low wage rate shows that in April 2023 around 16% of employment relationships in Germany will fall below the low wage limit, which is 13.04 euros gross per hour. The decline is significant compared to 2018, where the share was 21%. In the new federal states, the proportion of low-wage jobs is 18%, while in the former federal territory 16% of employment relationships fall into the low-wage category. The gender distribution shows that 19% of women and 13% of men receive low wages. Particularly affected are young employees under 25 years of age and older employees over 65 years of age, 40% and 37% of whom work in low-wage jobs, respectively.

Industry-specific investigations and training relevance

The high proportion of low wages in the hospitality industry is also striking, where 51% of employees are affected by low wages. Other sectors that have high proportions of low wages include agriculture, forestry and fishing with 43%, art, entertainment and recreation with 36% and other economic services with 31%. The connection between level of training and low wages is also significant: 37% of employees without vocational training receive low wages, while this proportion drops to 15% for people with vocational training and to only 6% for university graduates. destatis.de

The present results are based on the earnings survey in April 2023 and offer a clear overview of the current labor market situation in Germany. They make it clear that despite positive developments, there are still significant challenges, particularly with regard to certain employee groups and sectors.