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Hagen Lesch / Helena Schneider / Christoph Schröder IW-Analyse No. 145 20. October 2021 Minimum Wage Adjustment and a Living Wage in Germany: What can Germany learn from France and the United Kingdom?

Germany’s Minimum Wage Act accords a Minimum Wage Commission the task of deciding on a biennial adjustment to the minimum wage. While including an overall assessment, their decision is to be oriented on the development of collective wages.

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What can Germany learn from France and the United Kingdom?
Hagen Lesch / Helena Schneider / Christoph Schröder IW-Analyse No. 145 20. October 2021

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

German Economic Institute (IW) German Economic Institute (IW)

Germany’s Minimum Wage Act accords a Minimum Wage Commission the task of deciding on a biennial adjustment to the minimum wage. While including an overall assessment, their decision is to be oriented on the development of collective wages.

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.

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What can Germany learn from France and the United Kingdom?
Hagen Lesch / Helena Schneider / Christoph Schröder IW-Analyse No. 145 20. October 2021

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

German Economic Institute (IW) German Economic Institute (IW)

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Proliferation of works councils and the desire for interest representation
Oliver Stettes IW-Report No. 1 19. January 2025

Proliferation of works councils and the desire for interest representation

Works councils exist in 7 per cent of the German establishments with five and more employees. The coverage rate has fallen significantly in the long run. Non-existence of works councils is, however, not equivalent to a lack of participation by the employees.  ...

IW

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Helena Bach / Carolin Denise Fulda IW-Trends No. 3 23. September 2024

Collectively Agreed Wages as an Instrument for Recruiting Skilled Labour?

Companies are increasingly focussing their attention on the recruitment of skilled workers and thus facing the growing challenge of making their job advertisements as attractive as possible.

IW

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