The 2021 elections and the minimum wage in Germany

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By JOSÉ VERÍSSIMO TEIXEIRA DA MATA*

The political, social and economic consequences of the legal minimum wage in Germany

Among the most burning issues that could be noted in the election of the new Bundestag that took place in Germany, where after complicated negotiations, on October 23, an agreement was finally reached for the formation of the new government,1 there is the question of the minimum wage2 cool, which has existed there since 2015, even if modestly Süddeutsche Zeitung, in its issue of September 20, 2021, called it a marginal theme (Randthema) of the electoral dispute.

The introduction, in Germany, of the legal minimum wage in 2015, as can be seen, belatedly, was a painful process in which the resistance of the conservative bodies managed to mobilize practically all of its components, and it would be unfair to forget its favorite argument, which, sincerely, they appealed: the minimum wage would put a series of companies in difficulty, or its more precisely catastrophic statement: the minimum wage with its starting point of 8,50 euros, the legal level of its inception, would increase unemployment, as warned in 2015 Lars Feld, then one of the five members of the Council of Economic Sages of the Federal Republic of Germany (Funf Wirtschaftweise).

It is true that Germanic creativity did not manage to formulate an argument such as that of genius that emerged in Brazil, where it was even imagined, even after decades of the constitutional minimum being in force, that the minimum wage would lead to the reduction of the lowest wages and of the minimum wage itself, or even, what in fact seems even more exceptional to us, that the minimum wage being eventually linked in some way to the minimum family standard, in the case of two family members working, we would be forced to divide the enormous salary in two, so that it remained truly and logically minimal.3

It is worth remembering that Brazil is a country where formal legislation on the subject can be considered advanced compared to several of the locomotive countries4Europe, even though we have not been able to explore all the dimensions of its implementation and the topic remains very open.

In Germany, what is certain is that, six years after the implementation of the minimum wage, it appears that the reality is already different, so much so that the aforementioned news organ, from Munich, the capital of Bavaria, and one of the largest newspapers in Germany , recognizes without mincing words that the introduction of the legal minimum wage was a factor in the development of the German economy. Instead of causing unemployment, what was seen - says the Süddeutsche Zeitung – was the decline in unemployment, with the minimum wage limit not costing jobs in the lower income brackets of workers. And as economists have noted, the introduction of the legal minimum was very positive there: low-paid and more unproductive jobs were replaced by more productive jobs. This is so true that, in good German, sentences the Süddeutsche Zeitung: “the minimum wage helps not only those who earn less, but it acts positively on economic growth”.

There are, however, workers in a significant number (three million, eight hundred thousand workers) who still perceive a value below the legal minimum, as recalled by the Reuters [Folha do Comércio], one of the most respected economic newspapers in the West, in its November 23, 2020 edition, based on a study by the German Institute for Economic Research (DIW). This problem, it seems to us, can only have a reasonable solution if it is faced both with support for companies and with correct monitoring.

The consolidation of the minimum wage in Germany since 2015 can be seen in the progression of its value from 8,50 euros per hour of work to 9,60 euros in 2021, which today means a salary of 1600 euros per month for about forty-five one hour weekly. The proposal of the candidate of the Christian Democratic Union (Angela Merkel's party), Armin Laschet, defeated in the last elections, would be to raise the minimum hourly rate to 10,45 euros, a proposal, moreover, that had already been formulated by the Government that now withdraws.

Olaf Scholz, the new chancellor, proposed 12 euros per hour (2000 euros a month for a week of approximately 41 hours) and, already during his campaign, made the question of the value of the minimum a condition for the possible coalition that should support the new government5, hammering out the refrain on his travels through Germany.

The party Die Linke proposed 13 euros per hour (about 2166 euros per month). Here according to SDZ whether it would be forcing too much and could even unbalance the labor market, leading to an increase in job losses.

In addition to the question of how high the minimum could be raised without somehow disrupting the economy, there is another question that justifies the different propositions of the actors involved. It is a struggle between bosses and employees over what should go directly to one or the other, that is, either as appropriation of the generated surplus or as salary.

It should be noted that in a solid and very productive economy, as is the case in Germany, and with the responsibility of political actors, the ghost of the nominal wage is not even remembered6 in discussions about the minimum wage. It will appear on the eve of the general and annual realignments of wages, but linked, in part, to the general mass of wages and not to the specific slice of the minimum wage, as can be seen from an article published in the Gazette Welt on November 28, 2021 (“These price changes promise Germany a tricky scenario”).

An important point of the question is the contingent of workers directly covered by the minimum wage of 12 euros an hour in Germany.

Assuming the threshold of 12 euros an hour, as proposed by the SPD, it is reached, according to the newspaper Süddeutsche Zeitung, the number of 10 million7 of workers, who, with their families, would benefit from the new value. What is inevitably observed is that the more the value of the minimum wage advances, the more the number of workers who benefit from it increases. This truth, however immediate or obvious, has two important consequences.

On the one hand, a more and more significant number of workers now have the State as one of those responsible for the wage policy that affects them. Salary becomes a policy, thus forming a dynamism that reinforces the requirement of public policies that refer to it within the national space, as an unavoidable point of the economic agenda.8

On the other hand, it allows the empirical gathering of a nomenclature of products that inform the basket specific to workers who are covered by the minimum wage amount, as well as their families. This leads to the statistical modeling of the basket and the projection of its scope in both consumption and production, allowing the monitoring of its variations and the guarantee of its proper functioning with the necessary economic policy interventions.

By the way, by way of comparison, it should be remembered that the Brazilian legislator pertinently deals with this point in Law No. 12.382, of February 25, 2011, which provides for this in its art. 5th:

“Art. 5th The Executive Branch will set up an inter-ministerial group, under the coordination of the Ministry of Labor and Employment, in charge of defining and implementing a systematic monitoring and evaluation of the minimum wage valuation policy.

Single paragraph. The group referred to in the caput will identify the basic basket of products purchased for the minimum wage and its future projections resulting from the increase in its purchasing power, under the terms defined by decree.”

This device now in potentia in Brazil, gaining a good level of concreteness, it could support and leverage the spheres of production and consumption associated with minimum wage public policies.

Another comparison that could be made with the minimum wage established in the Brazilian Constitution concerns the legal status of the German minimum wage. In Germany, the minimum wage does not have its seat in the Constitution, but in the Law on the Regulation of the General Minimum Wage, established in 2015 in the Government of Groko (the grand coalition between the two main parties in Germany, the Social Democratic Party and the Union Christian Democrats, who elected Angela Merkel as chancellor). Here, it would not be out of place to say that, even due to the size reached, the legal minimum wage became part of the concrete constitution of Germany, particularly of the economic constitution (in the sense of constitution, as used by Aristotle in his Constitution of Athens or, in some way, in the sense of the constitution of the English), becoming an important institution of society, where, as indicated above, it was presented as a condition for the formation of the government of Olav Scholz.

Due to its rapid consolidation and the increasing weight that it must have in the German economy, the issues generated by the minimum wage policy in Germany deserve our attention. The speed with which the legal minimum is implemented and consolidated there becomes an inescapable experience for reflection.

*José Verissimo Teixeira da Mata holds a master's degree in philosophy from the University of São Paulo (USP). He translated, among other books, On Interpretation, by Aristotle (Unesp).

 

Notes


1 The new German government is a coalition formed by the Social Democratic, Green and Liberal Democratic parties, with Chancellor Olaf Scholz, who took office as Chancellor on December 7, 2021.

2 Our dictionaries record a byzantine difference between minimum wage and minimum wage. The first name would be reserved to designate the worker who receives the legal minimum, while the second expression without the hyphen designates the salary. In fact, the minimum wage is a metonym of the phrase “the worker who earns the minimum wage”, this would already be a reason for both concepts to have the same spelling, and, of course, being a single and indivisible concept, the minimum wage should, yes, be written with a hyphen.

3 “Thus, if the minimum wage were set at the amount necessary to lift a family out of poverty, it would not be necessary to incorporate, in determining its value, the fact that family income is no longer generated exclusively from a single job. work? Furtado, A. In: “Reflections on the minimum wage policy”, Cadernos Aslegis, vol. 3, Brasilia, 1999, p. 60.

4 England has an obscure age-related minimum…workers over twenty-five are paid more than those aged 18…and Italy and the Nordic countries don't even have the legal minimum wage.

5 HE DOES. Cf. https://www.faz.net/aktuell/wirtschaft/thema/mindestlohn

6 “Another case was the minimum wage, this one in my first campaign. I agreed to say that in four years we would double the minimum wage. But he did not say, nor could he say, that he would double the real minimum wage. Well, we doubled it, but we doubled the nominal minimum wage. Real wages increased a lot too, but not to the same extent. Yes, you can jump from 50 to 100, but the real question is what is the exact value of these 100 compared to the 50 before, in terms of effective purchasing power; if it's not doubled, it's because it hasn't doubled in real terms. It's quite simple, so just don't deceive yourself or deceive the population”. Cardoso, FH. Letters to a young politician. Alegro Publisher. Rio de Janeiro, 2006, p.151.

7 Approximately 9 million workers earned less than 12 euros per hour in 2019, according to the edition of Reuters October 30, 2021, based on a WSI study (Wirtschafts und Sozialwissenschaftliche Institut). There are more cautious estimates that estimate around nine million workers who will directly benefit from the minimum of 12 euros per hour.

8 In order to have a comparison with the established dynamism, we can remember the one that Minha Casa Minha Vida generated. “For Ana Maria Castelo, [a notable] specialist in civil construction at the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre-FGV), while it lasted, the MCMV was important because it had budget predictability, allowing construction companies to develop methods and technology” to massify and make construction cheaper. “Total number of favelas doubles in Brazil in ten years and 20 million are starving"In Folha de São Paulo in 13 / 10 / 2021.

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