German nesties: Is this true?

elenetxu · February 2012

Spain just passed a labor reform law and the press is talking about what it's like in Germany. Is it true that there's no minimum wage, and that there's people working for one euro an hour!? How on earth does one survive on that wage?

(Article: http://economia.elpais.com/economia/2012/02/09/actualidad/1328790777_303626.html )

kelly321 · February 2012

Yes and no.

It's true that there is no general minimum wage. Some branches (like postal workers or nursing home assistants) have instituted a minimum wage, but there's a big debate about whether that should be legal (doesn't it hinder competition, etc).

Yes, there are people who work for 1 euro an hour, it's actually a whole category of jobs call 1-Euro-Jobs (actually 1.50 Euros now), but there are conditions. First of all, these people are long-term unemployed and they receive welfare. To try to help integrate them back into working life, companies can hire them for only 1.50? / hour. They earn this in addition to the welfare they receive, but they are limited to only working a max of 100 hours / month.

Also, they cannot be used to do jobs that are done by regular employees. My husband's company used to use the 1.50-Euro people all the time to do things like help file papers, update databases, seasonal gardening work, etc. Since the law was changed, however, he as the HR Director has a really hard time using them because all of those jobs would have to be done by a regular employee if the 1.50-Euro person wasn't there, so it doesn't qualify. (Does that make sense? Like if the 1.50-Euro person wasn't there to update the database, a regular employee would have to do it) So now if the companies want to use them they basically have to create new tasks that aren't essential to the business, which is virtually impossible. It's really unfortunate because it used to be a good way for the long-term unemployed to get back into a job, get experience, etc (they were only allowed to be employed at the 1.50? level for 6 months at a time with a possible 3 month extension), and it was also a good way for the companies relying on meager government subsidies for running nursing homes to get temporary help. The meager government subsidies is a story for another day, though.

Sorry if that was a little long-winded. :-)