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Expansion of sectoral minimum wages since 2008

Country of implementation
Germany
General short description of the innovation
Expansion of sectoral minimum wages based on collective agreements on further sectors since 2008. Until then German construction industry was the only sector that adopted a sectoral minimum wage. Its introduction in 1996 was a reaction to a substantial increase in the amount of posted workers in the first half of the 1990s. At that time many domestic building companies charged building companies from southern and eastern Europe with sub-orders for larger projects. These companies in turn, posted their workforce to the lower wages of their home countries. In 2014 the sectors covered by the law are: / / 1. Construction Industry / 2. Commercial Cleaning / 3. Roofing Trade / 4. Electric Trade / 5. Painting and varnishing Trade / 6. Scaffolding Trade / 7. Security Services / 8. Special tasks in coal mining / 9. Industrial laundrie / 10. Waste management / 11. Training and further education services according to the Second and Third Code of Social Law (Zwei / tes und Drittes Buch Sozialgesetzbuch (SGB II und SGB III)). / 12. Slaughterhouses and the meat product sector / 13. Care Services / / The legal basis is the Law on the Posting of Workers (Arbeitnehmer-Entsendegesetz) which in turn is based on the EU Posted Workers Directive. Employers associations and trade unions able to conclude national binding collective agreements for the respective sector are allowed to conclude a collective wage agreement about both introduction and amount of a sectoral minimum wage. It is important to note that not solely apply to posted workers, but also applies to domestic low-wage earners in the respective sectors. In case that the contracting employers association is regarded as representative for all companies in the sector, the Law on the Posting of Workers enables the Federal Ministry for Labour and Social Affairs to declare the collective agreement as generally binding. The law itself, however, does not specify the criteria for representativeness but makes reference to the general legal mechanism to declare collective agreements as generally binding. According to this general rule, at least 50% of the employees in the respective sector have to work in companies which are member of the respective employers association and thus covered by the collective agreement. In addition, the general applicability of the respective collective agreement has to be in the public interest.
Target group
Total Population
Policy Field
  • wage
Type of Policy
  • publicly mandated to non-state organisation
Duration of the policy
2007; The duration of the policy in general is not limited. However, the duration of the respective sectoral minimum wages corresponds to the duration of the collective wage agreement. Thus for a prolongation of the sectoral minimum wage, both a new collective agreement and a new 5 application for admission in the Law on posted work ers is necessary. At present it is unclear whether the general statut ory minimum wage, to be introduced in January 2015, will make the sectoral minima redundant or not. This will strongly depend on the effective differences between the former and the la tter at the time of the introduction of the general statutory minimum wage. Thus the condition only remaining is that the general applicability of a collective agreement has to be in the public interest.
Scope of innovation
  • Number of intended beneficiaries: The number of potential beneficiaries depends on the number of sectors incorporated in the Posted Workers Act and the number of potential beneficiaries eligible for the minimum wage.
  • Spatial coverage: There are different sectoral minimum wages for East and West Germany in most of the sectors concerned. In security services there are even differential minimum wage rates at the level of the Federal State at least in West Germany. Furthermore there are different minimum wage rates dependent on the skill-level or the kind of job. At present the following regulations are into force (May 2014; in parentheses: changes in rates already provided for in 2015): 1. Construction Industry West Germany (without Berlin): Unskilled workers (Werker): 11.10 (11.15 ); Low-skilled (two years of vocational training with reduced theoretical training; Fachwerker): 13.95 (14.20 ) East Germany (without Berlin): Unskilled workers (Werker): 10.50 (10.75 ) Berlin: Unskilled workers (Werker): 11.10 (11.15 ); Low-skilled (two years of vocational training with reduced theoretical training; Fachwerker): 13.80 2. Commercial Cleaning West Germany including Berlin: Inside the building: 9.31 (9.55 ); facade cleaning: 12.33 (12.65 ) East Germany: Inside the building: 7.96 (8.21 ); fa?ade cleaning: 10.31 (10.63 ) 3. Roofing Trade East and West Germany: 11.55 4. Electric Trade West Germany: 10.00 East Germany including Berlin: 9.10 5. Painting and varnishing Trade West Germany: Unskilled workers: 9.90 ; skilled workers: 12.50 East Germany: Unskilled workers: 9.90 ; skilled workers: 10.50 Berlin: Unskilled workers: 9.90 ; skilled workers: 12.30 6. Scaffolding Trade East and West Germany: 10.25 7. Security Services Baden-W?rttemberg: 8.90 Bavaria: 8.42 Bremen, Hamburg: 7.50 Lower-Saxony: 7.50 Northrhine-Westphalia: 8.23 Hesse: 7.76 Rhineland-Palatine, Saarland and Schleswig-Holstein : 7.50 East Germany including Berlin: 7.50 8. Special tasks in coal mining East and West Germany: Unskilled workers: 11.92 ; Skilled workers (Hauer, Facharbeiter): 13.24 9. Industrial laundries West Germany: 8.25 East Germany including Berlin: 7.50 10. Waste management East and West Germany: 8.68 11. Training and further education services according to the Second and Third Code of Social Law (Zweites und Drittes Buch Sozialgesetzbuch (SGB II und SGB III)) West Germany including Berlin: 13.00 East Germany: 11.65 12. Slaughterhouses and meat product sector East and West Germany: 7.75 13. Care Services West Germany including Berlin: 9.00 East Germany: 8.00 8 Stonemasonry and sculptor West Germany including Berlin: 11.25 East Germany: 10.66
General description of (intended) objectives and strategies
Combating wage dumping in specific sectors without harming the collective bargaining system. On the contrary: The special characteristic of this method can even be interpreted as a strategy to strengthen it. In this respect, a particular focus was on the regulation of wage dumping by posted workers or migrant workers from other member states of the European Union. In contrast, wage differences and thus the wage competition between East and West Germany widely remained. The second objective was the avoidance of a general minimum wage.
Nature of the innovation-short-term perspective
It can be characterized as a short-term measure to stabilize the collective-bargaining system and to regulate low-wage competition in particular sectors (those sectors which have applied for admission).
Type of ideal-typical strategy for the innovation
  • typical strategy for the innovation (optional; according to Obinger)-encompassing security
Type of innovation
  • retrenchment or expansion of an existing/earlier policy
New outputs
  • bargaining
  • benefit level (Higher wages lead to a higher benefit level in retirement or in case of unemployment)
  • regulations of the labour market
  • wages
Intended target group
Low-wage workers in particular sectors (the need for statutory regulation has to be declared by the bargaining partners)
Working age population
  • main source of income: paid work
Employers-private institutional actors
strong role of employ ers associations
Actors involved in policy-making/implementation and/or evaluation
  • making/implementation and/or evaluation-central state (Federal Ministry of Labour and Social Affairs )
  • making/implementation and/or evaluation-employees (organised or individual) (Trade Unions)
  • making/implementation and/or evaluation-employers (organised or individual) (Employers associations )
Clarification of the role of various actors
Employers associations and trade unions able to conclude national binding collective agreements for the respective sector are allowed to conclude a collective wage agreement about both introduction and amount of a sectoral minimum wage. In case that the contracting employers association is regarded as representative for all companies in the sector, the Law on the Posting of Workers enables the Federal Ministry for Labour and Social Affairs to declare the collective agreement as generally binding. The law itself, / however, does not specify the criteria for representativeness but makes reference to the general legal mechanism to declare collective agreements as generally binding. According to this / general rule, at least 50% of the employees in the respective sector have to work in companies which are member of the respective employers association and thus covered by the collective agreement.
Intended output
  • bargaining (Strengthening of the collective bargaining system )
  • regulation of the labour market
  • wages
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