The making of the German minimum wage: a case study of institutional change

Abstract

In the more recent dualistic theories, Germany is cited as an example of a less solidaristic equilibrium, in which ‘producer coalitions’ between core workforces supposedly unaffected by deregulation and their employers prevented the introduction of a minimum wage. The present article shows that such an equilibrium never existed. Core workforces are being threatened by the outsourcing of jobs to the low‐wage sector. This threat created the breeding ground for a joint campaign by manufacturing and service unions for a minimum wage, which made it possible to amalgamate the unions' considerable resources at company level, their strength being derived from the German system of codetermination. Under pressure from the manufacturing unions in particular, the arrangements for the minimum wage follow, as far as possible, the traditions of free collective bargaining. As a result, the social partners in Germany have a considerably stronger influence on the minimum wage than those in the UK.

Solidarity at Work: Concepts, Levels and Challenges

“…In 2018, 85.72% of women worked in services in Germany compared to 59.48% of men (OECD, 2017). Wage inequalities in Germany also increased from the mid-1990s, though the introduction of the minimum wage indicates the continuing struggle to maintain forms of solidarity (Bosch, 2018).…”

Using Occupations to Evaluate the Employment Effects of the German Minimum Wage

“…On January 1, 2015, Germany introduced a universal minimum wage for the first time in the country's history. The policy was adopted in response to a gradual erosion of the collective bargaining system since the mid-1990s that led to the expansion of low-wage work (Bosch 2018). Between 1995 and 2015, the share of workers on low pay, i. e. 60% of the median wage, grew from 14 to 19%, which equals a 36% increase (OECD 2019).…”

Employer organisations transformed

“…Such a return seems possible only with new forms of state support and delegations of authority to EOs. These forms of state action are less common but do occur, for example, the German government delegated the authority to set the newly introduced minimum wages to EOs and unions in 2015, providing both actors with a new purpose in a context of declining collective bargaining (Bosch, ). The “strange non‐death” of EOs is a continuing phenomenon, but one that may yet lead in unexpected directions.…”