Low-Wage Workers in Brandenburg: 339,000 Earning Less Than 14 Euros an Hour
The Food, Beverages, and Catering Union (NGG) revealed that around 339,000 hardworking individuals in Brandenburg, Germany, earn less than 14 euros per hour. In this workforce, 96,000 employees put in full-time hours, 140,000 work part-time, and approximately 103,000 hold marginal positions. NGG voiced concern over the detrimental impact of such meager wages on the state, with the federal and regional governments providing around five billion euros in housing benefits to this group alone in 2023.
The NGG's criticisms stem from a study conducted by the Pestel Institute in Hanover, which also found that approximately ten million workers in Germany earn wages of up to 14 euros an hour.
The study suggested that raising the hourly wage to 14 euros could generate an additional ten billion euros for the social security system and bump up income tax by about two billion euros. The figures are considered conservative estimates by the researchers.
The hospitality industry, relying heavily on low-wage workers, could potentially flourish from wage increases, according to the NGG's study. Labor unions, including the NGG, are pushing for higher wages in the social sector, proclaiming that such changes could alleviate the financial strain on the state and boost treasury revenue through income taxes.
Insights from Enrichment Data
Raising the minimum wage to 14 euros per hour could bring about various advantages and hurdles in various aspects of society:
Potential Benefits:
- Enhanced Living Standards: Higher wages would directly improve the living conditions of millions of workers, allowing them to better face inflation and escalating expenses.
- Reduction in Inequality: A substantial rise in the minimum wage would help bridge the wage gap between low-wage and middle-income workers, fostering a more balanced society.
- Boost in Consumer Spending: Higher disposable income for workers typically leads to increased consumer spending, sparking economic growth and positively impacting other sectors.
- Healthier Workforce: Better-compensated workers may report improved health and well-being, lowering absenteeism and enhancing productivity.
Potential Challenges:
- Heightened Labor Costs: For the hospitality industry, higher labor costs could test budgets, forcing companies to reassess staffing levels or working hours, which might reduce hiring and elevate automation dependency.
- Wage Compression: Significant wage increases can narrow pay disparities, potentially provoking dissatisfaction among more experienced employees who feel their compensation does not reflect their abilities.
- Profit Margin Squeeze: Small, independent businesses in the hospitality sector may struggle to preserve profit margins with higher wages, potentially limiting their capacity to reinvest and enhance services.
- Pressure on Prices: Businesses may hike prices to preserve profit margins, which might deter customers and impair competitiveness in the market.
Financial Impact on the State:
- Social Contributions: Higher wages for minimum-wage workers contribute to Germany's pension, health, unemployment, and long-term care insurance schemes, potentially increasing the state's financial burden.
- Tax Revenue: Increased wages would boost taxable income, potentially raising income tax revenue. However, factors such as tax-free allowances and social contributions could limit the disposable income of workers, impacting the actual tax collection.
The balance of advantages and drawbacks in raising the minimum wage to 14 euros per hour for underpaid workers in Germany is clear. On one hand, increases would improve living standards and reduce inequality, while on the other, they might elevate labor costs and pose challenges for hospitality businesses and the state's financial burden. The specific impacts on income tax revenue depend on several variables, such as tax-free allowances and solidarity surcharge exemptions.
