German employers get creative to avoid paying minimum wage


BERLIN — From charging slaughterhouse workers for their knives to compensating staff with tanning salon vouchers, German employers are coming up with creative ways to avoid paying a new minimum wage, angering unions.

Chancellor Angela Merkel’s government introduced Germany’s first nationwide wage floor of 8.50 euros (S$12.48) per hour early this year. The law was the brainchild of the Social Democrats (SPD), who made it a condition of joining Ms Merkel’s coalition in 2013.

The centre-left party argued that it was a necessary response to the sharp rise in low-wage jobs over the past decade. Some 3.7 million people were expected to benefit.

But in the months since it went into effect it has become clear that not everyone is taking home more pay. The NGG food and catering union is fielding up to 400 calls a day from people who say their employers are finding ways to circumvent the law.

“We’re seeing some employers display an awful lot of creativity to get round paying the minimum wage,” Mr Burkhard Siebert of the NGG said.

He said some workers were no longer getting paid for overtime. Others are being charged for drinks and clothing they are required to wear on the job.

German Labour Minister Andrea Nahles has admitted to implementation problems but said she had not yet heard anything to suggest the law may need to be changed. The far-left Linke party say it was “botched” and contains too many loopholes.

Butchers have complained that they must pay a fee of up to 100 euros per month to use knives they need to cut meat. Bakers say they are being paid in buns and bread instead of cash.

Mr Bernd Bischoff, who runs an advice centre for contractors in the city of Oldenburg, said the meat industry was especially affected. Workers from south-east Europe were being charged more for accommodation to offset the cost of higher wages.

Last week a survey by pollster Infratest dimap showed 15 per cent of Germans had heard about employers sidestepping the minimum wage from friends and family. Some 3 per cent said they were directly affected.

Among them is 66-year-old Juergen Schluens, who used to earn around 6.30 euros per hour delivering papers in the village of Witzwort close to the North Sea.

Once the new wage law took effect, he says his boss reduced the premium he received for starting work at 4.45am and demanded that he get the job done in half the time.

“The minimum wage of 8.50 euros per hour was paid on paper but my boss said I could only take 52 minutes to do my round,” he told Reuters. “I needed about 94 minutes — and I should know as I’ve been doing the job for nearly 11 years.”

He wrote a note of complaint to his boss and says his contract was subsequently terminated without notice, prompting him to take his employer to court. Mr Schluens’ employer did not respond to a request for comment.

Unions report cases of bakeries, a solarium and a gym giving staff coupons to use on site rather than paying the minimum wage. A baker who refused such an offer was told to give the vouchers to her husband, the NGG said.

Other workers have had their holiday entitlement reduced or premiums for working nights, holidays and Sundays slashed.

Firms breaking the law face fines of up to 500,000 euros.

But it’s not bad news for everyone. Mr Uwe Schlegel, a Cologne lawyer, advises small firms on how to get around the minimum wage legally. Demand for his services is “extremely high”. REUTERS

Singapore has Progressive Wage Model (PWM) instead of Minimum Wage

The Progressive Wage Model is a wage structure advocated by the Labour movement of Singapore,[1] which is led by the National Trades Union Congress (NTUC), the sole national trade union centre in Singapore. The objective of introducing the Progressive Wage Model is to increase the salaries of workers through the enhancement of skills and improving productivity. Progressive Wage is enforced via business licensing (as opposed to legislation).[2] This model was designed to enable rank and file workers to climb the wage ladder, and provides for a minimum wage. This would then lead to higher wages for the worker and improved overall productivity which helps sustain economic growth.


Here are some stories on Progressive Wage Model (PWM)

Minimum Wage or Progressive Wage Model – Which Makes More Sense?




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