Minimum wage? Pros and cons

The debate sparked off by social and political forces on the legislative proposal for “guaranteed minimum wage” submitted by Labour Minister Andrea Nahles is still open. Exceptions on minimum wage in the legislative framework will need to be justified in compliance with the said law, which stipulates that “situations of disadvantage due to race, ethnic origin, gender, religion or ideology, to age, gender or disability are to be prevented and eliminated”. The required minimum wage amounts to 8.50 euro/hour. Regina Stieler-Hinz, National president of the German Catholic Workers’ Movement (KAB), presented to Massimo Lavena, for SIR Europe, an analysis of prospects and critical aspects of the proposal. What is KAB’s evaluation regarding entry into the job market also with the implementation of minimum wage? What are the critical aspects? “Young people want a good level of education. It was noted across Europe, with or without minimum wage. However, despite a good level of formation, in many parts of Europe they are unemployed. It is the result of a long-lasting economic crisis, not of high wages. Minimum wages for young people, existing in certain European countries, did not bring about concrete positive results on the situation of those Countries in terms of training and employment. A survey carried out in Great Britain was aimed at establishing whether minimum wage could affect young people’s intention of getting an education. No negative effects were registered. In Germany, there is an increasing lack of specialized labour. The Country benefits from a dual education system and good universities. That’s why we don’t believe there is the risk that young people will opt of education qualifications. Already now, the earning deriving from employment is often higher than the minimum expense for higher education (which in fact is not affected by the law on minimum wage). Nonetheless young people opt for vocational training. However, at the beginning of their professional life young people risk receiving low salaries for no reason. Employers have the possibility of replacing older employees with young ones if they are not compelled to pay a minimum wage. In our Country our youths find precarious jobs because of poorly paid – when they are paid – internships, and closed-end job contracts”. On the basis of the proposal minors cannot access minimum wage, to which is preferred education and vocational training. However, how many chances would a minor have with an incomplete education? “At present, over three quarters of all under-25 youths in Germany are students or people undergoing vocational training courses, 90% are under 20. Only 5% of young people who are less than 20 are in employment and only a very low number of under-18 youths – less than 1% – without professional training have a job. There ensues that in Germany there is an evident need for young people to access vocational education. The exception envisaged in the legislation not to pay a minimum wage to youths under 18 thus involves students who wish to earn something. According to the law for general equalization it is considered age-based discrimination. As regards the law on minimum wage and the request to exclude youths under 18, some aspects need to be clarified. In case of training and internship courses the law is not applicable because minimum wage is applied to employees, and thus from a strictly juridical angle it does not involve apprentices and trainees. In fact, the latter cannot be considered ‘workers’, although the law on vocational training can be applied (Bbig). Article 17 stipulates that apprentices have the right to be ‘adequately’ remunerated”.There is talk of dedicated projects for long-term unemployed. What is Kab’s position to this regard? “With regard to the long-term unemployed we see no reason to exclude them from the minimum wage. Even now – without minimum wage – many unemployed people in Germany continue to benefit from the Hartz IV legislation and also receive other income. This additional income often draws origin from the so called Minijob (labor paid not more than 450 euro per month and enjoying exemption from taxes and contributions by the employee, and to a lesser extent for the employer, ed.’s note), thus hourly wages are minimal. In Germany there is no time limit for the Minijobs. The legislative proposal envisages minimum wage to the long-term unemployed only after six months, employers would hire these people intentionally on temporary six-month contracts”.