The minimum wage is becoming the plaything of politics

Berlin The warning from Andrea Nahles when the minimum wage was introduced in 2015 was urgent: The grand coalition made a conscious decision to let an independent commission decide on future adjustments, said the SPD labor minister at the time. The political setting of the lower wage limit at 8.50 euros should remain a one-off affair. Otherwise you open the door to “arbitrariness and populism”.

In contrast to the introduction of the lower wage limit, when many economists warned of massive job losses, critics are currently not so concerned about the wage level. “The twelve euros would probably be reasonably manageable for the economy,” says the director of the Freiburg Walter Eucken Institute and ex-chairman of the economy, Lars Feld.

As a scientific advisor, he is a member of the minimum wage commission. His criticism is more of a regulatory nature: “Because we are experiencing exactly the politicization that we in the Advisory Council warned against when the minimum wage was introduced.”

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Economist Holger Schäfer from the employer-related Institute of the German Economy (IW) also fears that the minimum wage will again become a political plaything in the next election in four years: “The left has already demanded 13 euros.”

The minimum wage was originally supposed to rise to 10.45 euros by July 2022

According to current law, the committee, which is made up of three employer and employee representatives, an independent chairman and two academics without voting rights, decides every two years on the lower wage limit. In doing so, it is required to “follow up” on the development of collective wages. Appropriate minimum protection for employees, fair and functioning competitive conditions and protection against job losses are also relevant criteria.

In its last decision at the end of June 2020, the committee decided to raise the minimum wage from 9.35 euros at the time in four stages to 10.45 euros by July 2022. It is currently at EUR 9.60 gross per hour. This pace of adjustment was not fast enough for the SPD and the Greens; they had promised twelve euros in their election manifestos.

The deputy Verdi chairman Andrea Kocsis, who is herself a member of the commission, also believes it is right for the legislature to intervene again: “At that time, we started too low with the 8.50 euros, and if we only focus on the collective wage index orientate, then it will be a long time before we get to the twelve euros, ”says the trade unionist.

But the regulatory concerns are great. The possible traffic light coalitionists want to raise the minimum wage, but at the same time commit themselves in their exploratory paper to strengthening collective bargaining autonomy, collective bargaining partners and collective bargaining coverage.

Intervention in a good 190 collective agreements

Employer President Rainer Dulger pointed out that by setting twelve euros, politicians would intervene in more than 190 collective agreements and make over 570 collectively negotiated wage groups superfluous.

A political stipulation of twelve euros is not only “a serious interference with collective bargaining autonomy”, but would also “create an enormous upward wage spiral and thus make the labor market extremely difficult for the low-skilled,” Dulger fears. Trade unionist Kocsis countered that it was regrettable “that the binding force of collective agreements is so low that we even have to regulate wages by law”.

Chancellor candidate Scholz had promised “to organize a pay rise for ten million citizens” – and sees this as a contribution to the fight against poverty in working life and in old age. Everyone who works should also be able to live from his earnings.

This concept of the so-called “living wage” initially sounds like a legitimate demand, says IW economist Schäfer. “But the minimum wage is unsuitable as an instrument for securing livelihoods.” Because whether an employee can make ends meet with earnings depends not only on the hourly wage, but also, for example, on the hours worked or the number of household members to be cared for.

“We must not abuse the minimum wage for social policy,” warns economist Feld. He does not believe that the minimum wage commission will simply continue as before after the political setting of twelve euros.

If minimum wage increases above the standard wage index were anticipated, that would certainly change the decision-making in the commission, he expects. “I could imagine that the willingness to raise the lower wage limit again in 2023 will be significantly reduced.”

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