Increase in the statutory minimum wage and changes in marginal employment. Statement of the IAB on the public hearing in the Committee for Labour and Social Affairs of the German Bundestag on 16-5-2022

Abstract

"For the public hearing in the Committee for Labor and Social Affairs of the German Bundestag on May 16, 2022, the IAB provided the following statement on the draft bill of the Federal Government and on the proposals of the motion of the Members of Parliament regarding the adjustment of the minimum wage and the changes in marginal employment. Under the German government's draft legislation, the statutory minimum wage is to be increased to 12 euros. Starting next year, the Minimum Wage Commission will again decide on the development of the minimum wage with an unchanged legal mandate. Since a large number of employees have been paid below 12 euros in recent years, this represents a significant intervention in the labor market. Significant wage increases are to be expected, although it remains to be seen to what extent the expected hourly wage increase will be reflected in monthly labor income, a reduction in unemployment benefit payments or a reduced risk of poverty. From today's perspective, a forecast of the employment effect is very uncertain. The empirical literature on the introduction of the statutory minimum wage and the more recent macroeconomic literature both paint a thoroughly positive picture. However, no reliable forecast can be derived from it. The German federal government plans to raise the upper wage threshold for marginal employment not subject to mandatory social security contributions for employees from currently 450 euros to 520 euros. Furthermore, the threshold will be adjusted in accordance with the development of the national minimum wage. The wage threshold for wages above marginal employment with reduced social security contributions is also raised from currently 1,300 to 1,600 euros in order to relieve low earners. At the same time, mini-jobs should be prevented from being misused as a substitute for regular employment or from becoming a part-time trap, especially for women. However, the reform will make employment in the lower part-time sector and especially marginal employment more attractive compared to the status quo. Linking the mini-job limit to the development of the minimum wage threatens to strengthen marginal employment and to increase the problems associated with the mini-jobs. Based on research findings, a reform to reduce mini-jobs rather than expand them could be justified, as they are associated with numerous disadvantages for employees. New regulations should rather aim to ensure that marginal employment is concentrated on those for whom employment subject to social security contributions would bring comparatively few advantages anyway (such as pupils, students, pensioners)." (Author's abstract, IAB-Doku) ((en))

Cite article

Bossler, M., Bruckmeier, K., Lietzmann, T. & Wiemers, J. (2022): Erhöhung des gesetzlichen Mindestlohns und Änderungen im Bereich der geringfügigen Beschäftigung. Stellungnahme des IAB zur öffentlichen Anhörung im Ausschuss für Arbeit und Soziales des Deutschen Bundestags am 16.5.2022. (IAB-Stellungnahme 05/2022), Nürnberg, 17 p. DOI:10.48720/IAB.SN.2205