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									This information is published in its original language. It is made available through the European Industrial Relations Observatory (EIRO), as a service to users of the EIROnline database. EIRO is a project of the European Foundation for the Improvement of Living and Working Conditions. However, this information has been neither edited nor approved by the Foundation, which means that it is not responsible for its content and accuracy. This is the responsibility of the EIRO national centre that originated/provided the information. For details see the "About this record" information in the EIROnline record to which this article is linked.

Questionnaire for EIRO comparative study on low-wage workers and the working poor – The case of Germany
1. Concept and Definitions  What is the definition of the “low-wage worker” prevailing in your country? Are there any specific national definitions?  Is there any specific national definition for the “working poor”?  Please state, if possible, the justification of those definitions. When defining „low-wage worker‟ the widespread definition used in science and politics at national and international level is a worker with wages below 75% of the national average. It can therefore be argued that, in all probability, social exclusion starts at this threshold. When wages fall below 50% of the national average the degree of social exclusion is particularly intense because participation in social and cultural life is severely limited. According to widespread conventions it is this income threshold which gives rise to the expression „working poor‟ for individuals in full-time employment whose income is defined as being below the poverty line. The federal government‟s poverty and wealth report (Armuts- und Reichtumsbericht der Bundesregierung) takes the thresholds of 50% or 60% for income poverty. The poverty report of the Hans-BöcklerFoundation, the German Confederation of Trade Unions (Deutscher Gewerkschaftsbund, DGB) and the Equal Representation Charitable Association (Paritätischer Wohlfahrtsverband) takes the 40% threshold for extreme poverty, the 50% for middle level of poverty and the 75% threshold for the so called „precarious prosperty‟ („prekärer Wohlstand‟) which corresponds to low-wage workers. 2. General overview  Please provide any available statistics on the number of low-wage workers in your country (both in absolute numbers and as a percentage of employees). Is this class of workers growing? At what pace? Is it growing faster than total employment?  What is the average wage for a low paid worker? (in Euros, PPP1 and as a percentage of the average wage). Is it growing faster than the average wage?  How often low-paid jobs lead to better-paid jobs? Do they serve as a useful entry point into the labour market for those with few qualifications or little work experience (this question refers to earnings mobility)?

1

Purchasing Power Parity

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Please provide any available statistics on the number of working poor in your country. Is this class of the population growing? At what pace?

Note: Whenever possible, please break down the figures by gender, age and part time
employment.

According to studies carried out by the Institute for Economic and Social Research (Wirtschafts- und Sozialwissenschaftliches Institut, WSI) there are about 6.76 million people (35.5% of all full-time employees) in western Germany with a wage below 75% of the average national wage and 2.19 million people (11.5%) with a wage below 50% of the average national wage in 1997 – see table 1. The average gross income of full-time employees, including income of dependent managers in western Germany (2001), amounted to monthly EUR 2,706 (EUR 1,817 eastern Germany). The derived thresholds , therefore, are EUR 1,329 at the 50% level (EUR 909 eastern Germany) and EUR 2,029 (EUR 1,363 eastern Germany ) at the 75% threshold. Table 1: Full-time employees with low pay in Germany (1975-1997)
Year Western Germany Income below 75% of the average national wage of all fulltime employees % of all full-time employees 29.7 34.8 35.5 Income below 50% of the average national wage of all fulltime employees % of all full-time employees 10.5 11.5 11.5 Eastern Germany Income below 75% of the average national wage of all fulltime employees in %% of all fulltime employees . . 35.6 Income below 50% of the average national wage of all fulltime employees % of all full-time employees . . 9.5

1975 1986 1997

Source: WSI; based on the employment survey of the Institute for Employment Research (Institut für Arbeitsmarkt- und Berufsforschung, IAB). A WSI evaluation of collective agreements shows that typical low-wage sectors in Germany are to be found in those service industries with a predominately female workforce. For example, in 1995 a porter in a hotel in the Saar region earned a basic gross income of EUR 826 per month. A florist earned about EUR 1,093 and a hairdresser about EUR 1,145. In comparison, in 1995 the average basic monthly income of the 24 most important collective agreement areas was about EUR 1,524. With regard to the total of the employees in the low wage sector, more than three quarters of all full time employees in western Germany are female and more than two thirds working in service activities. According to the above mentioned poverty report – see section 1- the problem of poverty during employment is much more widespread than often supposed. 34.5% of the population in Germany must manage their life with incomes below 75% and 9.1% with 50% of the national average income. Table 2: Percentage of the population in poverty and with low wages in Germany 1998

Share of the population

50% of the
average national wage

75% of the
average national wage

Total population 9.1% 34.3% 100% Sex Male 48% 9.0% 34,1% Female 52.0% 9.1% 34.3% Age Up to 15 years 17.1% 14.2% 49.2% 16 to 30 years 18.1% 13.2% 41,4% 31 to 45 years 23.8% 9.1% 33.1% 46 to 60 years 19.8% 6.0% 26.4% 61 to 75 years 15.5% 4.8% 24.9% Nationality of the head of household German 89.9% 8.1% 31.7% Non German 6.3% 16.2% 55.1% Marital status Married/living together 57.3% 6.7% 30.7% Unmarried 24.7% 10.6% 31.8% Divorced 6.9% 13.1% 38.2% Widowed 9.4% 4.8% 21.7% Source: Hanesch/Krause/Bäcker (2000), Armut und Ungleichheit in Deutschland. The poverty report, furthermore, stated that low incomes increased between 1985 and 1998 and it was particularly „other employees‟ (includes part-time workers) in comparison to full-time workers that affected this development. In 1985 19.4% of „other employees‟ in western Germany received an income below 75% of the average income, while it increased to 22.3% in 1998 – see table below. Year Table 3: Distribution of the gross income in % of the arithmetic mean Up to 50% 51-75% Full-time Other All Full-time Other worker employee * worker worker employee * Western Germany 6.9 16.9 23.8 15.0 2.5 5.5 18.7 24.2 17.3 2.4 3.9 19.0 22.9 17.8 2.9 3.7 17.4 21.1 19.3 3.9 3.9 18.1 22.0 19.4 3.2 5.2 19.3 24.5 17.1 3.0 Eastern Germany 2.4 9.8 12.1 13.1 9.1 3.8 10.1 13.9 16.0 3.5

All worker 17.5 19.7 20.7 23.3 22.6 20.1 22.2 19.5

1985 1988 1991 1994 1997 1998 1991 1994

1997 4.9 10.5 15.6 18.5 3.8 20.3 1998 3.8 12.4 16.3 21.4 4.1 25.6 *other employees includes part-time workers, short-time worker, trainees and marginal part-time workers, working pensioners, schoolchildren (above 16 years), students, persons doing military or civilian service, persons in maternity and child raising leave. Source: Hanesch/Krause/Bäcker (2000), Armut und Ungleichheit in Deutschland. With regard to the earning mobility a study by the WSI revealed hat the number of lowwage workers and the number of highly paid employees (more than 125% of the average wage) increased between 1975 and 1995, while the middle wages (75 – 125%) reduced from 56.1% to 47.8%. The income classes in particular indicate that there is a comparatively wide spectrum of low and very low wages despite full-time work eg in the class below 50% of the average wage – see table below. Table 4:Relative positions of wages of full-time worker in western Germany Income 1975 1986 1995 from ..% Share of Cumulat Summar Share of Cumulat Summar Share of Cumulat below the ed share ised the ed share ised the ed share ..% of respecti share respecti share respecti the ve class In% ve class In% ve class average in % in % in % wage 0-20 20-25 25-50 50-68 68-75 75-100 100-125 125-130 130 and more 0.3 0.8 9.4 11.8 7.4 34.0 22.1 3.3 10.9 0.3 1.1 10.5 22.3 29.7 63.7 85.8 89.1 100.0 1.0 0.8 9.7 14.3 9.0 31.7 17.5 2.0 14.1 1.0 1.8 11.5 25.8 34.8 66.5 83.9 85.9 100.0 0.9 0.9 9.1 16.0 9.0 31.8 16.0 1.8 14.6 0.9 1.8 10.8 26.9 35.9 67.6 83.7 85.5 100.0

Summar ised share In%

29.7

34.8

35.9

56.1 14.2

49.1 16.1

47.8 16.3

Source: WSI; based on the employment survey of the IAB. 3. Statistics coverage and quality (Please note that we are not asking for any figures in this section, only information about the coverage and quality of the existing statistics.  To what degree have wage statistics been generated in your country that make comparisons between wage levels of individual workers (e.g. Structure of Earnings Statistics)? Please give a brief overview, including the types of sectors and/or occupations that are covered/not covered by wage statistics.  Who is responsible for collecting this kind of data, or who actually does? (The national statistical office or equivalent, trade unions or/and employer organisations, universities, independent research centres or others)? Are such statistics collected at a regular basis or on a more ad-hoc basis? To what degree are such statistics publicly available?

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Please give a short assessment of the quality of wage data available with regards to low pay. Is it detailed enough (individual data) to correlate pay differences with individual characteristics of the worker or with characteristics of his/her job? Yearly wages of individual workers were counted with the „1%-sample survey‟ of the Institute for Employment Research (Institut für Arbeitsmarkt- und Berufsforschung, IAB) of the Federal Employment Service (Bundesanstalt für Arbeit, BfA). The data are available from 1975 to 1995 and come from the employers‟ monthly compulsory registration of each employee who is subject to social security contributions to the social security agencies. The survey contains about 180,000 full-time workers in western Germany and since 1992 some 60,000 in eastern Germany with different personal and company characteristics, eg sex, nationality, marital status, individual actual earnings, full- or part-time employment, sector. This survey is the biggest and most reliable source and it is limited to jobs which are subject to social security contributions up to the upper earnings limit. Excluded are career civil servants (Beamte) and the self-employed. Since 1995 the data is available to external scientists, too. The „income- and consumption sample survey‟ (Einkommens- und Verbrauchsstichprobe, EVS) of the Federal Statistical Office (Statistisches Bundesamt, destatis) also count the income above the upper earnings limit. Particularly high incomes (over DM 35,000 monthly) eg of managers, however, will not be counted. The EVS conducts a survey every 5 years and includes the results from questioning 50,000 households. Moreover, since the 1950s there has been the quarterly earnings survey in industry, wholesale and retail trade, credit institutions and insurance business which compiles data about gross wages and weekly working time and salaries subdivided eg into sex and branch of the economicy. For the last time in 1995, furthermore, exists the structure of earnings statistics which based on individual data and comprise the same economic branches as the former survey. Excluded are the employees in the public service, jobs which are not subject to statutory pension funds and only companies under 10 employees are counted. The „German Socio-economic Panel‟ (Sozialökonomisches Panel, SOEP) in existence since 1984, carries out an annual survey of about 6,000 households and is organised by the German Institute for Economic Research (Deutsches Institut für Wirtschaftsforschung, DIW). The questionnaire contains demographic, social and economic questions directed at each member of the household (up to 16 years) and to the total household, eg composition of the household, income data for individual persons and income of the household and labour participation.

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4. Factors affecting low wage  Low-paid workers have similar characteristics across countries, despite the large differences in the overall incidence of low pay. Usually reported factors affecting low payment are the size of establishments, the sector/industry, the occupation, the type of ownership of the establishment (public private, third sector), the marital status of the worker, gender, age, education and skills, type of contract and type of employment. Based on the existing literature, please indicate if possible the degree to which each

of the above factors affects the extent and the persistence of low wages. If other factors not mentioned above are significant, please specify. Note: Referring to type of contact and type of employment, please give emphasis first to contracts of indefinite duration or not and second to part time employment and temporary agency work. As reported by an investigation carried out by Eurostat in 2000 (Statistik kurzgefasst, Thema 3, Niedriglöhne in den Ländern der EU, 2000 Luxemburg) 17% of the jobs with a minimum of 15 weekly working hours in Germany are low-paid jobs. 79% of those are jobs with an indefinite duration, 21% are limited in time. 48% of the low paid jobs are full time and 52% are part time jobs – see table below. In Germany the factors of part time work and a low payment rate similarly affect the probability of earning low wages. While 41% of part time employees are low-paid workers, with a payment rate which is not at the low-paid level, 42% earn low wages without being part time workers and 12% are part time workers with a low payment rate, too. Table 5: Characteristics of low paid jobs and low paid worker In % Working hours Full time 48% Part time 52% Contract type Indefinite duration 79% Limited in time 21% Employer Privat 73% Public service 27% Economic branch Agriculture 1% Industries 27% Service activities 72% Sex Men 20 Women 80 Age group 16-24 years 11 25-49 years 67 50-64 years 22 Educational level High 7 Middle 57 Low 36 Employment state Employed 86 Unemployed 4 Not employed 10 Source: Statistik kurzgefasst. A particular situation in Germany with regard to income levels is the regional difference between western and eastern Germany. Eastern Germany could be described as a nearly closed low-wage region. Whereas the eastern collectively agreed wages have meanwhile

reached a level of about 92% (1995) of the western average of agreed wages, the level of the actual wages for full-time worker is below the collective level and is only about two thirds of the western level. Due to the stagnating level of adaptation since 1995 it can be assumed that this level is more or less valid today, too.   Are low wages associated to low productivity? Are the activities where low-paid work is concentrated, low productivity activities? If yes, are there any exceptions (combining low wages and high productivity)? Are low-wage workers completely absent from knowledge-based activities?

Not every low wage correspond to a low productivity. Low wages and low productivity often express estimations. To associate low wages and low productivity, moreover, is theoretically problematic because of the fundamental difficulties in quantifying individual productivity. Particularly in the service sector where low wages are frequently found it is not possible to quantify productivity (eg productivity of a nurse or of a porter). Besides the costs of production the market price of a service is related to the demand. And for example in the person-related service sector, work intensive operations can be identified which require a wide spectrum of social, flexible and communicative skills. Therefore it is not correct to conclude that there are only low productive activities and such requiring a low level of qualification in the service sector. 5. Low paid workers and the working poor  To what extent low paid workers are working poor in your country? See section 2.  How often a low paid worker is not a working poor? Which are the factors keeping a low-wage worker out of poverty? (Living with his parents / social transfers / property income / living in household with another worker having a higher wage etc.).

An examination of the personal characteristics of full-time employed working poor reveals that low wages are paid for different levels of skills – see table 5. Furthermore, an above average number of women are classified as working poor (nearly 80%) and those working in the services sector (nearly 70%) of the economy.

Table 5: Structure of full-time employed working poor in western Germany 1995 Characteristics Share in % Sex and nationality German men 15.24 German women 71.85 Foreign men 5.31 Foreign women 7.60 Vocational position Non skilled worker 32.46

Skilled worker 16.97 Master craftsman/foreman 0.69 Salaried employee 49.88 Training/education Without vocational training/ without upper 20.94 secondary leaving certificate With vocational training/ without upper 59.82 secondary leaving certificate Without vocational training/ with upper 0.55 secondary leaving certificate With vocational training/ with upper 1.36 secondary leaving certificate Non-university type higher education 0.31 University type higher education 0.71 Economic branch Primary sector 2.77 Producer goods 5.91 Consumer goods 7.04 Food and natural stimulants 6.79 Distributive services 25.23 Economy related services 11.86 Household related services 21.07 Society related services 13.35 Source: WSI; based on the employment survey of IAB. According to the poverty report, (see section 1) beneath the status working or nonworking and the type of household particularly the combined income of the household members influences the probability of being above or below the poverty line. Just with one working partner in a household the risk of poverty will be reduced The lowest risk of being below the poverty line is in a household with 2 working members of the household. Nevertheless, double earnings are not a guarantee for avoiding poverty, in fact, the amount of the wages remains decisive. Furthermore social transfers eg housing benefit and child allowance influence the income of a household. With regard to the effect of the public redistribution the share of poverty in 1998 was reduced from 9.7% to 8.3% in western Germany. The share of poverty for single workers was reduced from 11.5% to 9.9% and a high effect was reached for households with single workers from 14.3% to 10.4%. Moreover, a sharper decline of the poverty share was reached with regard to the type of employment for „other employees‟ (part- and short-time worker, trainees, etc.) from 37.5% to 14.6%. 6. Minimum wage and collective bargaining  Evidence supports that minimum wage regimes reduce the number of low paid workers. If a minimum wage is implemented in your country please explain the existing minimum wage system in terms of:  The way it is fixed, (by legislation or by collective bargaining).

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The level at which the minimum wage operates. The extent of the coverage of the minimum wage (sector, occupation, type of contract, type of employment, gender, age, length of service, skills, physical and mental capabilities of the employee, economic conditions affecting the sector or the firm, other factors).

A statutory minimum wage does not exist in Germany but minimum pay rates are defined by collective bargaining. The collective agreements define the minimum wage for employees who are bound by collective agreements. By way of the extension of collective agreements (Allgemeinverbindlichkeitserklärung, AVE) the terms and conditions of a collective agreement are applied to those employees who are not covered because they are either not members of the signatory trade union or because their employer is not a member of the employers' association which is party to the agreement. The AVE of collective agreements protects employees from wage dumping and the employers‟ against unfair competition. Particularly low-wage branches come under AVE, as there are eg: building trade, retail trade, catering trade, textile industries and cleaning trade. AVE, however, is not applied very often to adjust downwards. While in January 2001, 534 of about 55,000 registered collective agreements were generally applicable agreements, in April 2002 there were only 516. A noticeable drop in generally applicable agreements on the amount of pay was seen in January 2001. There were 53 in comparison to 61 in the previous year. According to a report of the Benchmarking group of the Alliance for Jobs (Bündnis für Arbeit), in industries the minimum pay rates reached 58% (1993) of the average wage.  Please give a brief assessment of the significance of minimum wage as a means of influencing the extent of low pay. Please give the views of the employer organisations and the trade unions on this matter.

With regard to the extension of the low wage sector it may be assumed that the rejection of a statutory minimum wage has supported this development. A legal minimum wage at an level which secure the existence minimum is a measure against inequitable pay. A statutory minimum wage has the advantage of common validity in contrast to collective agreements which do not apply to all employers and do not guarantee wages at an existence-securing minimum. The Confederation of German Employers‟Association (Bundesvereinigung Deutscher Arbeitgeberverbände, BDA) rejects a nationwide statutory minimum wage as well as minimum wages based on the AVE. BDA argues that a minimum wage would not be compatible with the system of collective agreement, which is based on the freedom of association and of contract. Only by the way of exception could a collective agreement on minimum wage become a generally applicable agreement but this only limited in time and at an moderate level of the wage. Until now the major part of German trade unions remain skeptical of or reject a statutory national minimum wage. A reason for this could be a result of the common understanding of the collective bargaining autonomy, according to which the state has not to intervene

in the collective bargaining. The Building, Agricultural and Environmental Union (IG Bauen-Agrar-Umwelt, IG BAU), the food, beverages and catering workers„ union (Gewerkschaft Nahrung-Genuss-Gaststätten, NGG) and the Unified Service Sector Union (Vereinte Dienstleistungsgewerkschaft, Ver.di) demand a national minimum wage of EUR 1,500. Together they have made an appeal the for an effective public campaign to reach this aim at DGB‟s federal congress which is to take place from 27. to 31.05.2002.  In the case that a minimum wage is agreed by collective negotiation please specify at which level (national, sectoral, company etc.) and point out to variations, if any, across the different levels. Also state, if minimum rates can apply solely to selected low paying industries.

See above The German Law on the Posting of Employees (Arbeitnehmer-Entsendegesetz) (DE0202208F, DE9909117F) provides that foreign national workers in the construction industry should be covered by the same minimum pay rates and employment conditions as German workers. Based on this law generally applicable collective agreements on minimum wages exist in the building industry (hourly EUR 9.80 in western and EUR 8.63 in eastern Germany) and the roofer trade (EUR 8.95/EUR 8.44).   Considering that low wage is linked primarily to part time, please identify and give a description of agreements or provisions of agreements (if any) that seek to increase the minimum wage of part-time workers. Is there any evidence in your country that the decentralisation of wage bargaining favours the incidence of low pay?

In Germany a decentral system of collective agreements does exist and, therefore, wage negotiations are mainly the responsibility of the parties of a collective agreement. These agreements are negotiated at branch level (or at company level) but not at a national level. Beyond the area of collective agreements employers and employees are in principle free to negotiate their pay levels. Main causes for low pay are offences against collective agreements, employers leave the employers‟ association and therewith are no longer covered by a collective agreement and sectors which are not covered by a collective agreement. 7. Wage floors It is often argued that minimum wages raise the cost of hiring low-skilled (inexperienced) labour, and if set too high relative to the average wage they tend to reduce the employment prospect of, especially young, low productivity workers. Is there any evidence that in your country confirming (or denying) this argument? A report on employment creation for low-skilled persons indicates that there is no evidence that wage reduction or the creation of new low-wage groups will automatically create lots of employment prospects for low-skilled people. International comparatives do not supply evidence that a higher wage spread will improve the employment prospects of these groups, too. According to international comparatives, for example, the employment

share of low-skilled people in Germany is much higher than in countries (for example USA, UK) despite a lower spread of the wages. An improved economic situation in general contributes to improved employment prospects for low-skilled people. A regional labour market and unemployment structures in Germany demonstrate that in regions with a low share of unemployment the share of unemployed low-skilled people is lower, too, without the necessity of having to extend a low wage sector. 8. Trade unions  Do trade unions agree with the way low-wage workers and/or working poor are currently defined in your country (see section 2)? If not, do they come with an alternative definition and with what arguments? The thresholds of 75% and 50% are also used by trade unions.  Please provide any figures or other data on trade union membership among low-wage workers, broken down by gender if possible and compared with figures for part-time workers.

There are no data available.  Are there any indications that the extent or the persistence of low pay in your country depends on the bargaining power of trade unions?

Economic and political situations have always influenced the bargaining power of trade unions. Since 1975 (start of the liberal-conservative Kohl-era ), with the breakdown of the socialist states and the reunification of Germany, the conditions of the German trade unions have changed and they act in an increasingly defensive way. Furthermore, the situation of permanent mass unemployment since the 1990s has particularly intensified pressure and complicated the trade unions capacity to act. Furthermore, in the 1990s the number of companies which were not related to collective bargaining increased so that because of this fact alone there were manifold possibilities to pay wages below collective standards. Collectively negotiated low-paid sectors are simply reality and there is a real tendency to dodge the collective standards. Therefore, a campaign as now demanded by three German trade unions - see below - is one important point to discuss and find measures against the extension of the low-wage sector.  Do trade unions in your country have specific targets for the improvement of the economic situation of low-wage workers? Do trade unions deal with low wage questions when they formulate their demands and define their priorities? If yes, please give examples of the most important initiatives and comment on their effectiveness.

In March 2002, the Federal Government extended the so-called „Mainzer model‟ to subsidise low wages (DE0202209F). While the trade unions at first opposed the nationwide extension they later more or less accepted it on condition that it was only one supplementary instrument towards increasing employment. Trade unions in general expressed criticism because in the medium-term the extension would not create new jobs and there would not be visible effects to improve the situation on the labour market. Ver.di criticised the low-wage model put forward by the government and demanded a reduction of overtime hours, working time reduction and measures to strengthen vocational training and further training of employees and unemployed people. In the retail trade between 20,000 and 30,000 have been destroyed since 1990 and salaries are much lower, in comparison, than salaries being paid in other branches. Furthermore – see section 6 – together with IG BAU and NGG Ver.di demanded a campaign for a minimum wage of EUR 1,500. The target is to win campaigners for this necessary aim and to develop strategies to contain the phenomenon of the working poor. Furthermore it must become aware that wage/salary is still the main income source for the major part of the population and there must be alternatives to the low wages conceptions.  Do employers in your country have any specific demands in order to raise the hiring of low-wage workers?

The Confederation of German Employers‟ Association (Bundesvereinigung Deutscher Arbeitgeberverbände, BDA) claimed for a general concept where wages of up to EUR 600 should be totally freed from pension contributions and contributions to unemployment insurance. They also demanded that recipients of social welfare benefits or unemployment assistance should be able to retain a substantial part of their extra income when they take on a low-paid job. According to the employers, for unemployed people who are not able to prove that they had made an effort to find a job there must be sanctions. In addition, regulations governing fixed term employment and temporary work need to be simplified. With reference to the crisis in the labour market and competitiveness of the German economy the employers demand opening clauses in collective agreements which is below collectively agreed wages and for more favourable conditions for employing long-term unemployed persons. 9. Labour market policies  Do instruments and orientation of employment policies in your country affect low pay? In particular, do employment creation schemes (e.g. local employment pacts) or policies aiming at increasing flexibility favour low wage work?  Is there any reduction of the tax wedge or employers‟ social security contribution in your country, aiming at increasing the number of low pay employment? If yes, give an assessment on the effectiveness of these reductions? In March 2002, the Federal Government extended the „Mainzer model‟ to subsidise low wages. The Mainzer model is one of two pilot projects which have been introduced for a duration of three years in four federal states (Länder). The model subsidises employees‟ contributions to non-wage labour costs while employers can receive a settling-in allowance for subsidised employees for a maximum of 6 months. Subsidies apply to

single persons who earn between EUR 325 and EUR 897 (EUR 1,707 for married couples) for a maximum of 36 months for newly created jobs. The subsidies reduce as the monthly income increases. While the government was in a rush to implement the model academic research is still ambiguous about the long term effects of such models on the labour market. Therefore a report by the IAB about different models to subsidise low-wages in Germany concludes that there have been no empirical records so far to demonstrate that the nation-wide introduction would make noticeable contribution to increasing employment. According to a further report by the Federal Minister of Labour and Social Affairs (Bundesministerium für Arbeit und Soziales, BMA) on the effects of the two pilot project concludes that after one year the models had fallen short of expectations - only 592 persons in total were counted. 10. Selected bibliography Please give, if any, selected bibliography concerning low-wage workers and the working poor in your country.          Armuts- und Reichtumsbericht der Bundesregierung (2001), (http://www.bma.de/doc/doc_request.cfm?A137F744D29A4D65BD36B6BB385B11 E0) Eichhorst, W. (2001), Benchmarking Deutschland, Berlin/aso W. Hanesch/P. Krause/G. Bäcker (2000), Armut und Ungleichheit in Deutschland, Hamburg Eurostat, Statistik kurzgefasst (2000), Thema 3, Niedriglöhne in den Ländern der EU, Luxemburg WSI-Mitteilungen (2000), Heft 8, “Working Poor” – Niedriglöhne im transnationalen Vergleich, Düsseldorf C. Schäfer (2000), Geringe Löhne – mehr Beschäftigung?, Hamburg Sozialpolitische Umschau (2000), Nr. 370, Fast jeder siebte Arbeitnehmer in der EU bezieht Niedriglohn, Berlin (http://www.bundesregierung.de/frameset/index.jsp) Weinkopf, C. (1999) Schaffung von zusätzlichen Arbeitsplätzen für Geringqualifizierte, Gelsenkirchen G. Pohl/C. Schäfer (1996) Niedriglöhne. Die unbekannte Realität: Armut trotz Arbeit Hamburg

Commentary
Please give your own assessment of the low-wage issue in your country today and how the government and the social partners are expected to deal with this issue in the future. Do you think that low-wage work is a temporary phenomenon in your country or is it an element of a new capital accumulation regime? The available data for Germany demonstrates that there has been an increase in the number of low-paid workers, that a wage spread exists and that collectively agreed lowwages are distributed throughout many branches of the economy. Furthermore, nearly three quarters of full time employees are female and more than two thirds work in service activities. Despite these developments - as the nation-wide extension of the „Mainzer

model‟ demonstrates -the extension of the low-wage sector continues to be an instrument for the government and employers to reduce the crisis on the labour market. Instead of continuing to pursue a low wage strategy with a focus on low-skilled employment the expected demographic changes mean that another strategy is required. Already the qualifications of the labour force is an important factor in the German economy. In future it is to be expected that the importance of qualified workers will increase, because of new production concepts and the expansion of the service sector which requires qualified and motivated employees. A combination of different measures (qualification offensive, working time policy, promotion of qualified employment including wages which secure a certain existence level) in combination with measures to improve the general economic situation, will be an alternative to the low-wage strategies. (Verena Di Pasquale, Institut for Economic and Social Research, WSI)


								
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