Berlin. The Minimum Wage Commission commissioned a series of research projects in 2020, the final reports of which have now been published. In eleven quantitative and qualitative studies, relevant questions on the current effects of the statutory minimum wage were analysed in accordance with the statutory evaluation criteria.
The Minimum Wage Commission commissions research projects in a two-year cycle, the results of which are incorporated into the Minimum Wage Commission's reports to the Federal Government on the effects of the statutory minimum wage. The final reports of the individual research projects are also published by the Minimum Wage Commission and the research institutes carrying out the projects.
In the final reports of the current research projects, findings are published on the effects of the statutory minimum wage on wages and working hours, on employment and unemployment, on companies and their competitive conditions, on seasonal work and on individual employment movements and company wage structures. In addition, the effects of the statutory minimum wage on the receipt of social benefits, poverty, consumer behaviour and the consequences of the coronavirus pandemic for employees in the minimum wage sector were examined. The observation period ranges from 2014 to 2021 and varies depending on the research project and available data.
With regard to wages and employment, the results of previous research projects on the impact of the minimum wage are largely confirmed in these studies. Effects can mainly be demonstrated for the introduction of the minimum wage, while the increases in the minimum wage have triggered no or hardly any additional effects on their own. Overall, the statutory minimum wage led to significant hourly wage increases with very moderate negative employment effects.
According to the project on the effects of the statutory minimum wage on wages and working hours, the descriptive analyses showed increases in monthly wages over time since the introduction of the minimum wage, but the causal analyses could not attribute these increases to the minimum wage. Descriptive and causal analyses of working hours showed a decline in working hours due to the minimum wage, although this was relatively small. Reductions in working hours during the coronavirus pandemic affected employees in the low-wage sector more than employees with higher earnings, as they were particularly frequently employed in sectors of the economy that were severely affected by the pandemic. With regard to wage mobility, the minimum wage had a positive effect on the overall and upward mobility of gross hourly wages.
According to the study of the effects of the statutory minimum wage on individual employment movements and company wage structures, wage inequality within companies has decreased in companies with a high minimum wage impact relative to companies that were only affected to a small extent. The decline in overall employment was mainly due to a decrease in marginal employment. The results for marginal employment were primarily fuelled by a significant decline in hiring in this form of employment until the end of 2019.
According to the project analysing the effects of the statutory minimum wage on the receipt of social benefits, the minimum wage and the minimum wage increases that took place after 2016 reduced the neediness of basic social security recipients and the fiscal expenditure for basic social security benefits, even if it was often not possible to overcome the receipt of benefits. In the study of the effects of the statutory minimum wage on poverty, no correlation was found at regional level, but at individual level, a statistically significant reducing effect of the minimum wage on the risk of poverty was found for couples with and without children and for younger workers.
According to the project on the effects of the statutory minimum wage on competitive conditions, the minimum wage only had a minor impact on the development of the number of companies and the development of labour productivity in Germany. Labour market regions particularly affected by the minimum wage showed a slight decline in the number of companies. This effect appears to have resulted in particular from an increase in the number of small companies with four or fewer employees leaving the market. The study on the effects of the statutory minimum wage on businesses and companies also concludes that the number of small businesses in Germany has decreased due to the introduction of the minimum wage, as there has been a slightly greater increase in business closures than business start-ups among small businesses. In addition, the increased labour costs due to the minimum wage have led to falling profits in the affected companies, while the wage satisfaction of the affected employees has risen.
As part of a qualitative study to analyse the effects of the coronavirus pandemic on minimum-wage companies and minimum-wage employees, the transitions between phases of government-ordered closure and opening were described as particularly difficult. From a company perspective, there were general reports of a worsening labour shortage, as there were frequent industry changes, particularly in the hospitality industry. The loss of income associated with short-time working would have been particularly serious for minimum-wage employees in marginal employment and those who rely on tips.
In a qualitative study on the effects of the statutory minimum wage on seasonal employment in agriculture and the hospitality industry, there were indications that the introduction of the minimum wage led to a significant increase in hourly wages in agriculture and a moderate increase in the hospitality industry. Higher labour costs were generally reflected in lower profit margins for businesses. In response to the introduction of the minimum wage, agricultural speciality crop businesses in particular have often started to charge their seasonal employees for the costs of accommodation services that were previously usually provided free of charge. The documentation requirements of the Minimum Wage Act have brought the statutory maximum working hours more into focus.
The individual final reports on the research projects are available at
www.mindestlohn-kommission.de/projektberichte.