The low-wage sector in Germany is the entry way for millions of people in a better-paid employment. This is a central finding of the report “The low-wage sector in Germany: development, structure and individual career paths”, which has been created by the Institute of German Economy (IW) on behalf of the Initiative New Social Market Economy (INSM).
One of the key findings of the report: each year low income earners rise 24.1 percent in the total of normal income earners. In the reverse direction the figure is only 4.8 percent. INSM-CEO Hubertus Pellengahr: “the so-called low wages are in Germany for many people one thing: starting wages”. The report also attests to the damaging effects of minimum wages, went on Pellengahr. “Minimum wages are not only preventing the entry into the labor market but also the financial and social advancement.”
This report confirms not only career opportunities, but also shows that the low-wage sector protect against poverty. Only 16 percent of people in this sector of earning fall into the category of poverty. Among the unemployed, however, the rate is over 60 percent. Pellengahr: “The report shows that the risk of poverty in unemployment is nearly four times as high as for the low-wage sector, partly because low-wage jobs are often additional earnings to household income.“
A third finding of the study: The fear of the middle class to slip into the so-called low-wage sector is empirically unsustainable. Although the low-wage sector in recent years has increased, it has been not at the expense of average wage earners. “The sector of average wage earners - that is, the employees with an hourly wage above the low pay threshold of nine euros - over the entire observation period is relatively constant at around 45 percent of the workforce, and in recent years it has actually risen slightly,” said Holger Schaefer, labor expert at the Institute of Business and author of the report. Shepherd: “On balance, the low-wage sector has created new, previously non-existent employment opportunities.“
“The capacity of the labor market is a clear indicator that we need more than ever to strengthen the framework for the generation of workers”, says Hubertus Pellengahr. INSM-CEO claims therefore that the period for unemployment benefit for all age groups to be limited to a maximum of twelve months. “The past has shown clearly that the supposed protection of the elderly goes in fact to their detriment, because they have been excluded. But older people are needed in the labor market, they have abilities that young people do not have: experience, calmness, decisiveness”.