The 2011/12/12 at 06:45
Cécile Boutelet, in Berlin
It’s a debate that comes back every time a major election is on the horizon in Germany, and is it’s expected to play a big part in debate in 2012, a pre-electoral year: should Europe’s leading economy introduce a minimum salary to its employment law? Until now, liberals and conservatives have always had they way. But according to a recent survey by the OECD, the German economy’s sound performances since 2010 at the price of unprecedented inequalities may well change the face of things. The Social Democratic party and the unions are working to put forward a change which would mark a turning point in German economic culture. For until now, one principle has prevailed over the German social economic system: that of the autonomy of social partners. According to this principle, the level of salaries results from the free confrontation of employers and unions that negotiate – sometimes at great length – to reach a consensus on a work price or “rate”.
Extremely powerful unions negotiate, branch by branch, for thousands of employees. The basic branch rate is then applied to all companies from the one sector, with advantages that vary according to the firm. The principle of the autonomy of social partners is generally accepted in Germany, for it largely leads employees to obtain good working conditions and guarantees employers social peace. For example, in industry, salaries are high, above the 8.50 euros per hour demanded as a minimum salary by unions. In the view of the employers’ federation, the minimum salary is therefore unnecessary, even counterproductive as it would for example stop the hiring of apprentices at salaries interesting for companies, allowing young people to find positions. The problem is that the flexibilisation of the employment market, introduced in 2003, has considerably upset the traditional rules of the game.
Part-time or short-term jobs have multiplied, especially in very small enterprises and low-salary activities where unions carry little weight. In these structures, the absence of a minimum salary is sorely felt: a class of poor workers, sometimes working for under 5 euros per hour, has developed. This is the flipside of the coin of the weak German unemployment rate – 6.4 % in November 2011. Leftist parties and unions have no shortage of arguments in favour of a minimum salary. Economists consider that its introduction, de facto in certain sectors, would have no macroeconomic consequences. “German competitiveness relies on industry where salaries are higher than the minimum salary would be,” explains Karl Brenke, a researcher at the German Institute for Economic Research in Berlin. The consequences of the introduction of a minimum salary would play indirectly and marginally on competitiveness by raising salaries for example in the social or security services or else personal services.”