The implementation of a higher minimum wage has led to a significant reduction in the proportion of low-wage jobs in Germany. Despite this improvement, nearly one in six employees still occupied positions in the lowest paid sector last year. The Federal Statistics Office – Destatis reported a decrease in the number of these employees from 7.5 million to 6.4 million. One contributing factor to this change is the upward adjustment of the minimum wage.
As per the data, nearly one in six subordinate employees were engaged in the low-wage sector in April 2023, earning less than €13.04 gross per hour. According to statisticians, the proportion of these jobs in all employment relationships was 16%, compared to 19% in April 2022.
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The low-wage sector encompasses positions with earnings less than two-thirds of the gross average hourly earnings. The assessment is conducted annually for the month of April, deemed representative. In April 2023, the threshold was set at 13.04 euros, compared to 12.50 euros in April 2022. It’s important to note that this evaluation does not include interns.
The legal minimum wage stood at 9.82 euros on January 1, 2022. It rose to 10.45 euros on July 1, 2022, and further increased to 12 euros on October 1, 2022. As of January 1, 2024, the minimum wage is 12.41 euros. It’s important to note that industry-specific minimum wages may surpass this baseline.
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Recently, low wages have been a focal point of discussion, especially as CDU politicians have criticized the 12% increase in national income at the beginning of the year. They suggested that it might be more beneficial not to work than to engage in low-wage employment. As a response, they advocated for mandatory regulations to ensure compliance with the so-called wage gap requirement. Nevertheless, researchers at the Ifo Institute have determined that even after the augmentation of social benefits, working remains more advantageous than not working.
The low wage sector
Michaela Engelmeier, the president of social associations, has urged for the provision of a perspective beyond the low salary threshold for the millions affected. She emphasized that without such measures, individuals could face an acute risk of poverty in old age. Additionally, Engelmeier called for an increase in the minimum wage, stating, “Given persistently high inflation, we are asking for a minimum wage of 15.02 euros.”
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In April 2023, the hospitality industry, with slightly over half of employment relationships (51%) affected, notably demonstrates an extensive low-wage sector. Similarly, in agriculture, forestry, and fishing, the proportion was 43%, and in arts, entertainment, and recreation, it stood at 36%, both exceeding the average for employees earning less than €13.04 gross per hour.
Working in the low-wage sector has a more disproportionate impact on women compared to men.
Almost one in five women worked in the low-wage sector, while for men, the figure was nearly one in seven. In both instances, these percentages decreased over the course of a year.
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Millions of workers receive only the minimum wage
As per provided information, 2.4 million jobs in Germany received exactly the legal minimum wage of 12 euros in April. This accounts for 6.2% of all employment relationships subject to the minimum wage, according to Destatis.