A government-appointed commission announced that Germany would raise its minimum wage twice over the next two years. The move would give Germans the second-highest minimum wage in the EU, after Luxembourg.
Why do even modest improvements happen by 2027 or some other far flung date, but cuts can happen overnight?
A business model that guarantees your employees poverty when working like that for their whole life, is not a business model. It’s an exploitation model.
still not sufficient to be classified as safe from poverty by EU standards
What is the definition of
safe from poverty?What I found was this:
The at-risk-of-poverty rate is the share of people with an equivalised disposable income (after social transfer) below the at-risk-of-poverty threshold, which is set at 60 % of the national median equivalised disposable income after social transfers.
By that definition, it is not possible to have a minimum wage “safe from poverty”. Since the minimum will always be below the median.
minimum wage equal or larger to 60% of median income (simplified) is considered to be not at risk of poverty, 14,60€ in germany is less than 60% of median income and thus cant be considered safe from poverty by EU standards.
Great. We used the same definition, that’s good.
Now, can you explain to me what minimum wage do you think would make it so minimum wage is safe from poverty according to that definition?
According to the Federal Bureau of Statistics the median income in 2024 in Germany was € 52,159 . 60% of this value is € 31,295.4. A worker with a 40 hour work week and the mandates 28 days of paid vacation days worked 1784 hours in 2024. Therefore by dividing 60% of the median income per year with hours worked per year we get the targeted hourly pay: € 17.55/h.
I am not sure why this seems to be an impossible task for you.
Yeah. It is clearly possible. I don’t know why I read it as 60th percentile instead of 60% of median
I don’t understand why you claim it would be impossible to reach the definition?
A simple constructed example: if the median income is € 20 by hour. A minimum wage of, say, € 15 would be considered safe. Why is that impossible?
A quick Google search shows me Destatis.de claims the median wage in April 2023 was € 24.59. Then 60% of that would be € 14.75. I would assume the median has increased a bit from 2023, and will increase further towards 2027, but I would from these numbers expect € 16 to for example be high enough to be considered safe from poverty, which isn’t that much higher than the proposed number.
The neat thing about using the median instead of the mean is that increasing the minimum wage only affects those earning the least, and thus doesn’t directly affect the median.
He probably was thinking of the mean instead of the median. Just a typical brain fart.
Of course it’s possible. The minimum wage doesn’t directly affect the median wage (unless more than half the population only gets the minimum wage).
If you think it’s impossible, please explain why.
After reading my comment. You are right, it is not impossible.
However, it still is not a good indicator for minimum wage.
IMO, minimum wage should be based on expenses. That is, it should cover what you need to live a decent life.
That definition is based on other’s income. Imagine you live in a country where housing is 1€/month and food is 0.10€/month. The rest of the costs scale accordingly. Yet it is an incredibly rich country and the median income is 10000€/year. Would you say that a yearly wage of 120€/year is risk-of-poverty? It’s 0.001% of the median income, yet it can provide for 10 years of housing in 1 year of work.
What you are referring to is absolute poverty. However, even if you can cover the very basics, such as rent, food and healthcare, if you have a lot less than most people that is known as relative poverty. Both are important to combat. I am assuming the definition is made as it is because it is quite simple to compute. Finding a good measure for cost of living is a lot more complex and easy to get stuck arguing what is an acceptable standard of living.
I’d argue it’s a great indicator, as expenses are necessarily tied to the wages of the population. An example like yours simply doesn’t happen.
This means you have to come up with a representative example of how to calculate expenses, and I haven’t seen a better approach for that than median wage, which seems to correlate highly with expenses.
And there are still voices against least income with arguments like:
- It increases inflation - inflation increased when companies got greedy, not when paying higher wages
- It destroys jobs - that didn’t happen at all
- Simple things like hair cuts, farming products will become too extensive - also didn’t happen - at least not because of least income
- It’s not necessary since incomes went up already due to labor and experts shortage - are they for real?
And there are still discussions to exempt things like seasonal workers or even elderly care workers from it - unbelievable.
I’ve never encountered someone arguing against minimum wage increase IRL. It’s probably because they fear the very high chance they’ll get slapped.
A coworker if me is actually arguing against minimum wage because his wife, who studied engineering is barley above minimum wage and increasing minimum wage would invalidate her extra effort for her diploma… You find a lot of mind acrobatics around arguments against minimum wage…
Arguing for her own underpayment seems a bit silly.
Good for Germany.
