Reduce poverty little
Researcher: Hardly any effect of increasing the minimum wage
02/23/2022, 11:14 am
The federal government wants to increase the minimum wage to 12 euros by October 1st. However, researchers at the Kiel Institute for the World Economy view this step critically. Many poverty-stricken people would not get the increase, such as pensioners, the self-employed, the unemployed or part-time workers.
According to the Kiel Institute for the World Economy (IfW), the planned increase in the minimum wage to twelve euros will have greater consequences than its introduction in 2015. “With such a high minimum wage, there is an increased risk that there will be a reduction in employment in the affected wage areas,” said IfW -Researcher Dominik Groll. “At the same time, the higher minimum wage will hardly lead to a reduction in poverty or social inequality.”
A minimum wage does not reach the vast majority of people at risk of poverty, criticized Groll. These are mainly pensioners, the self-employed, the unemployed or part-time employees. Only a relatively small proportion of low-wage earners live in households close to the poverty line, while significantly more live in households with medium or high incomes.
Monthly wages often remain unchanged
The federal government wants to raise the statutory minimum wage to twelve euros as of October 1 during the course of the day. With the proposal, Federal Labor Minister Hubertus Heil is implementing a key campaign promise made by his party. Greens and FDP gave their approval in the coalition agreement. According to Reuters’ draft law, around 6.2 million workers can expect a pay rise. The minimum wage is currently €9.82. On July 1, the lower wage limit will increase to EUR 10.45 according to current law.
According to the IfW, the introduction of the minimum wage in 2015 has increased hourly wages according to scientific studies, but has reduced the number of working hours. The monthly wages have remained unchanged. “The promise of a significantly higher minimum wage sounds tempting, but the increase is likely to fail to have the promised effect in terms of labor and social policy,” said Groll.
According to the Federal Statistical Office, the current minimum wage of 9.82 euros per hour corresponds to a gross minimum wage of 1621 euros per month for a full-time position. That in turn corresponds to 48 percent of the average gross earnings of all full-time employees. Efforts are being made in the EU to raise the national minimum wages to at least 60 percent of the respective average gross median earnings.