How to define a Minimum Wage … Experiences from Germany and other European Countries Association of Free Trade Unions of Slovenia (ZSSS) Friedrich Ebert

How to define a Minimum Wage …Experiences from Germany and other European Countries

Association of Free Trade Unions of Slovenia (ZSSS)

Friedrich Ebert Stiftung

International Conference on Minimum WagesLjubljana, 16 June 2015

Dr. Thorsten Schulten

Content

1. Minimum Wages in EuropeProblems of Comparison

2. How to define a minimum wage?Views of the European Court of JusticeExperiences from Germany and other European Countries

Dr. Thorsten Schulten 16 06 2015

National Minimum Wages in Europe(per hour, in Euro, January 2015)

16 06 2015Dr. Thorsten Schulten

11.12

9.61

9.21

9.10

8.65

8.50

8.06

4.57

4.16

3.93

3.35

3.04

2.42

2.34

2.29

2.18

2.17

2.00

1.96

1.82

1.30

1.06

0.00 2.00 4.00 6.00 8.00 10.00 12.00

Luxembourg

France

Netherlands

Belgium

Ireland

Germany

UK

Slovenia

Malta

Spain

Greece

Portugal

Poland

Estonia

Croatia

Slovakia

Latvia

Czech Republic

Hungary

Lithuania

Romania

Bulgaria

Source: WSI MinimumWage Database 2015

National Minimum Wages in EuropeProblems of Comparison


Comparison in Euro Influenced by exchange rate

Different costs of living

National Minimum Wages in Europe(per hour, in Purchasing Power Parities, January 2015)


Source: WSI Minimum Wage Database 2015





Different relative valuesIn comparison to average or median wages

Relative Level of Minimum WagesMinimum wage in % of median wage, 2013


6161

5654

5250505050

4848

4747

4645

4141

3836

0 10 20 30 40 50 60 70

FranceSloveniaPortugalHungary

LithuaniaBelgium

Germany*Poland

RomaniaLatvia

IrelandNetherlands

UKSlovakia

GreeceSpain

LuxembourgEstonia

Czech Republic

Relative Level of Minimum WagesMinimum wage in % of median wage, 2013


6161

5654

5250505050

4848

4747

4645

4141

3836

0 10 20 30 40 50 60 70

FranceSloveniaPortugalHungary

LithuaniaBelgium

Germany*Poland

RomaniaLatvia

IrelandNetherlands

UKSlovakia

GreeceSpain

LuxembourgEstonia

Czech Republic

Poverty threshold50%

Low-pay threshold66.67%





Different relative valuesIn comparison to average or median wages

Different scope of the minimum wageExclusion of certain groups of workers

Different definitions of minimum wagesWhich wage components are includedand which not?

Content

1. Minimum Wages in EuropeProblems of Comparison

2. How to define a minimum wage?Views of the European Court of JusticeExperiences from Germany and other European Countries


Minimum Wage in Germany

New Statutory Minimum wage of 8,50 Euro per hour(from 1 January 2015)

German Minimum Wage Actinclude no definition of a minimum wage, but refers tothe Law on Posted Workers

German Government says that the definition of a minimum wage has been has been clarified by jurisdiction of the European Court of Justiceand the German Federal Labour Court


How to define a minimum wage?


European Posted Workers Directive (96/71/EG)

“For the purposes of this Directive, the concept of

minimum rates of pay … is defined by the national

law and/or practice of the Member State to whose

territory the worker is posted” (Article 3).



Jurisdiction of the European Court of Justice

Case C341/02: Commission v. Germany, 14 April 2015

Case C‑522/12: Isbir v. DB Services GmbH, 7 November 2013

Case C‑396/13: Sähköalojen ammattiliitto ry v. Elektrobudowa Spółka Akcyjna12 February 2015



European Court of JusticeCase C341/02Commission v. Germany (14. April 2005)

“It is entirely normal that, if an employer requires a worker to carry out additional work or to work under particular conditions, compensation must be provided to the worker for that additional service without its being taken into account for the purpose of calculating the minimum wage.” (Recital 40)



European Court of JusticeCase C341/02Commission v. Germany (14. April 2005)

Judgment follows the principle that minimum wages can include all wage components “which do not alter the relationship between the service provided by the worker and the consideration which that worker receive in return.” (Recital 43)

Every work which is in addition to normal work can not be include in the minimum wage and has to be paid extra !!!



European Court of JusticeCase C‑522/12Isbir v. DB Services GmbH, (7 November 2013)

“In that regard, the Court held that it was normal that, if an employer requires a worker to carry out additional work or to work under particular conditions, compensation must be provided to the worker for that additional service without its being taken into account for the purpose of calculating the minimum wage.” (Recital 39)



European Court of JusticeCase C‑396/13: Sähköalojen ammattiliitto ry v. Elektrobudowa Spółka Akcyjna(12 February 2015)

“According to the Court’s settled case-law, allowances and supplements which are not defined as being constituent elements of the minimum wage by the law or practice of the Member State to whose territory the worker is posted, and which alter the relationship between the service provided by the worker, on the one hand, and the consideration which he receives in return for that service, on the other, cannot under the provisions of Directive 96/71, be considered to be elements of that kind” (Recital 36)

Calculation of the German Minimum Wage


“As a rule, those employer payments that are paid in compensation for the employee’s “normal work” are to be counted as components of the minimum wage. Payments that an employee receives as compensation for work beyond this may not be counted as part of the minimum Wage.“

German Ministry of Labour (2015)

Calculation of the German Minimum Wage


Can be considered Can not be considered

• Basic remuneration • Overtime bonuses

• Lump-sum payments • Bonuses for night or weekend work

• Guaranteed bonuses paid on a regular (monthly) basis

• Bonuses for heavy and dangerous work

• Annual bonuses (Christmas and holiday bonus)

• Tips

• Compensations for additional costs (e.g. work wear, work equipment, travel costs etc.)

• Additional company pensions

Can Bonuses for Work during Nights, Sundays or Public Holidays be included into the Calculation of the Minimum Wage?


Non!

No!

Nee!

Nein!

Bonuses for work during

special working times are not part of the

minimum wage, buthave to be paid

extra !!!

Conclusion: Why a precise definition of the Minimum Wage is so important?


Fairness for Workers:Extra work should be paid extra!

Control and Enforcement:Unclear definitions give opportunities to circumvent the Minimum Wage Law

WSI Minimum Wage Database


Current Minimum Wage Data

from 30 Countries!

http://www.boeckler.de/wsi-tarifarchiv_44064.htm

16 06 2015

Available in English!

Contact and Further Reading …



[email protected]

FES-Studies

Social Europe9 April 2015New Book

Documents

How to define a Minimum Wage … Experiences from Germany and other European Countries Association of Free Trade Unions of Slovenia (ZSSS) Friedrich Ebert