Saturday

28th Jan 2023

Analysis

Poor pay: the flipside of Germany's low unemployment

  • Low wages, easy to hire and fire - the core of the German labour market model (Photo: Wonderlane)

With its record-low unemployment (5.4%), Germany stands out among fellow eurozone countries such as France or Spain, suffering from sky-high jobless rates.

Part of Germany's success is due to a series of reforms pushed through by the Social-Green government of former chancellor Gerhard Schroeder ten years ago, overhauling the labour market and welfare system.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

He made it easier for companies to hire and fire, lowered taxes and limited social benefits. The Schroeder model is now viewed as a must-do for crisis-plagued EU countries in the south.

But the flipside of Germany's high employment rate is low-paid and unstable jobs.

A debate in the German Bundestag on Thursday (25 April) focused on the widening income gap and social inequality, as Social-Democrats and Greens unsuccessfully tried to introduce a German minimum wage.

Social-Democrat leader Peer Steinbrueck, who is challenging Angela Merkel for the chancellorship in September elections, said the minimum wage is needed for a "socially just economy."

Labour minister Ursula von der Leyen noted there is a "widening income gap." But she put the blame on the old Red-Green government which crafted the "lousy" model.

She said that no across-the-board minimum wage is needed because the most vulnerable sectors - like construction or healthcare - already have "minimum wage thresholds."

According to government statistics published by the Sueddeutsche Zeitung, hundreds of companies do not respect the thresholds, however.

The firms have been fined, but with too few inspectors, the risk of being caught is small enough to encourage evasion.

For his part, Enzo Weber, a macroeconomics and labour market professor at the Regensburg University, says that even if Germany introduced a minimum wage, it would not solve the social injustice problem.

"The reason why problems are big in the low-income area is because there are too many low qualified workers for too few adequate jobs," he told this website also on Thursday.

He said German labour market policies still focus on unemployment per se - to get people into any kind of job, whether it is temporary or low-paid, or to get them into self-employment.

"There is virtually nothing for the people with low qualifications to get a job in a middle-qualified area. That's where there are a lot of jobs available, but not that many to take them, because it requires extra training. And that's where we should focus the labour market policies on," Weber noted.

He said the German model might not be so easy to export to Italy or Spain because the crisis has created special conditions.

"Germany was lucky with the timing, the reforms were introduced when the economy was not as bad as it is now for the crisis countries, with recession and massive unemployment. It may be easy for us Germans to say:'Let them do it, we've done it as well.' But we were not in a crisis like they are," he explained.

"The model also has disadvantages - it has drifted more in the direction of precarious employment," he added.

Opinion

Greece's spy scandal must shake us out of complacency

The director of Amnesty International Greece on the political spying scandal that now threatens to bring down prime minister Kyriakos Mitsotakis. Activists and NGO staff work with the constant fear that they are being spied on.

Latest News

  1. Pressure mounts on EU to coordinate visas for Russian rights-defenders
  2. Dutch set to agree to US-led chip controls to China
  3. No record of Latvian MEP's 'official' Azerbaijan trip
  4. Why the new ECHR Ukraine-Russia ruling matters
  5. Europe continues to finance Russia's war in Ukraine with lucrative fossil fuel trades
  6. Official: EU parliament's weak internal rule-making body leads to 'culture of impunity'
  7. Red tape border logjam for EU's 1.3m 'frontier workers'
  8. Greece's spy scandal must shake us out of complacency

Stakeholders' Highlights

  1. European Parliamentary Forum for Sexual & Reproductive Rights (EPF)Launch of the EPF Contraception Policy Atlas Europe 2023. 8th February. Register now.
  2. Europan Patent OfficeHydrogen patents for a clean energy future: A global trend analysis of innovation along hydrogen value chains
  3. Forum EuropeConnecting the World from the Skies calls for global cooperation in NTN rollout
  4. EFBWWCouncil issues disappointing position ignoring the threats posed by asbestos
  5. Nordic Council of MinistersLarge Nordic youth delegation at COP15 biodiversity summit in Montreal
  6. Nordic Council of MinistersCOP27: Food systems transformation for climate action

Stakeholders' Highlights

  1. Nordic Council of MinistersThe Nordic Region and the African Union urge the COP27 to talk about gender equality
  2. Friedrich Naumann Foundation European DialogueGender x Geopolitics: Shaping an Inclusive Foreign Security Policy for Europe
  3. Obama FoundationThe Obama Foundation Opens Applications for its Leaders Program in Europe
  4. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos
  5. European Committee of the RegionsRe-Watch EURegions Week 2022
  6. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material

Join EUobserver

Support quality EU news

Join us