Berlin If you want to follow in the footsteps of a significant wage gap in Germany, you drive on the autobahn in Wolfsburg. The A2 heading southeast, on the A14 past Leipzig, behind Chemnitz on the B95 and further south. At some point you end up in the Erzgebirgskreis.
Here, not far from the border with the Czech Republic, a good four out of ten full-time employees earned less than 2284 euros gross per month in 2020. According to the definition of the Federal Employment Agency (BA), they worked in the “lower pay range”. All employees who receive less than two thirds of the median gross earnings of all full-time employees are gathered there.
In Wolfsburg, where the journey began and Volkswagen is the largest employer with its well-paid industrial jobs, the proportion of low-wage earners is only 6.4 percent. It is only slightly higher in Erlangen, where Siemens Healthineers is headquartered. This is the result of a new study by the Economic and Social Science Institute (WSI) of the union-affiliated Hans Böckler Foundation.
Fortunately, the lower pay range has become smaller in the course of the good labor market and wage development in the years before the start of the corona crisis. In 2011 it still belonged to 21.1 percent of full-time employees subject to social security contributions nationwide, the proportion fell to 18.7 percent in 2020. Apprentices are not considered. The statistical earnings threshold, which marks the upper end of the low-wage range, rose by around ten percent in the period under review.
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“In recent years we have succeeded in pushing back the lower pay range,” says WSI researcher Helge Emmler. This applies in particular to eastern Germany, where the proportion of low-wage earners has fallen from 39.3 to 29.1 percent within ten years. In western Germany the rate remained relatively unchanged between 16 and 17 percent during this period. However, since employment has increased significantly over time, the absolute number of low-wage earners in the west has risen by more than 200,000 since 2011, while it fell by a good 320,000 in the east.
With a stronger collective bargaining agreement, the differences could be leveled out further, believes Seils. In the east, collective bargaining coverage is much less pronounced than in the west. The planned increase in the minimum wage to twelve euros could also help to push back the low-wage sector further.
Thanks to its large industrial employer, the city has the lowest proportion of low-wage earners in Germany.
(Photo: imago images / Tom Maelsa)
Although the gap between East and West has narrowed, the analysis shows that low-wage rates of 30 percent and more are still relatively common in eastern German urban and rural districts. In contrast, even rural regions in the west remain under this mark, albeit only barely in some districts of Lower Saxony, Schleswig-Holstein, Rhineland-Palatinate and Bavaria.
In metropolitan areas with large industrial employers and in financial, scientific or administrative centers, the lower pay range is only weakly represented. In addition to the front runners Wolfsburg and Erlangen, this also applies to Stuttgart, Ingolstadt, Darmstadt, Munich and the surrounding area, the Böblingen district or cities such as Salzgitter, Ludwigshafen, Frankfurt am Main, Karlsruhe and Bonn, where the proportion of low-wage earners is only between nine and eleven percent moved.
On the one hand, this is due to the fact that urban regions often attract highly qualified people who can demand higher wages. On the other hand, the housing and living costs in cities are higher than in rural areas. Employers who want to attract or retain employees have to compensate for this with higher wages. “But that doesn’t necessarily mean more purchasing power for employees, because rents and prices eat up the higher wages,” says WSI researcher Eric Seils.
In the nationwide analysis, it is also noticeable that around a quarter of full-time women work in the lower pay range, but only 15.4 percent of men. Employees under the age of 25, migrants or employees without a vocational qualification also stand out with high rates. In an industry comparison, the lower pay range in the hospitality industry is the largest at almost 69 percent, followed by temporary work (67.9 percent) and agriculture and forestry (52.7 percent). But also in the art and entertainment industry, in logistics and in retail, the low-wage rates are in some cases well above the average.
More: The low wage sector is both a blessing and a curse