Minimum Wage Adjustment and a Living Wage in Germany: What can Germany learn from France and the United Kingdom?

This binding rule has proven its worth. While the collective bargaining system has come under pressure to make adjustments in certain low-wage sectors, there have been no long-term detrimental effects on the collective bargaining process. The amendment to the adjustment mechanism proposed by the Federal Minister of Labour, which requires the minimum wage to be based on median income, would jeopardise this success and make se rious inroads on collective bargaining autonomy. The experience of France and Britain shows that, unless firms received wage subsidies, transforming the minimum wage into this so-called ‘living wage’ would create negative pressure on employment. This argument – together with the fiscal burdens such subsidies would give rise to – needs to be addressed when the policy is debated. Moreover, it should be borne in mind that the introduction of a living wage in the United Kingdom in 2016 took place in a highly favourable economic environment and that the measure includes an emergency brake for less favourable circumstances.