Saturday, February 28, 2015

Minimum Wage Talk for 2017

It's not one of those stories that you will notice much in the German news, but it has serious consequences for small business operations throughout Germany.

When all the smoke was done with the minimum wage discussion....not only did the wage go up to 8.50 Euro per hour......but they decided it was better to remove this future situation from the hands of the Bundestag.  So a committee was formed.  They will be the future of all talks on pushing minimum wage in Germany up.

The nine-person committee would have some breathing room established....1 January 2017 is the date where they have to pull to push the minimum wage yet again.

Somewhere in this situation is a requirement for more documentation.....for employers.  There are some stringent rules on record keeping.....which means some added expense for all companies.  The CDU/CSU folks want this record keeping to be kept on employees 1,900 Euro or less.  The SPD folks want the record keeping kept on employees making 2,958 Euro or less.  Neither party will say the number of employees involved or how their angle is different or better.

It's a mixed bag when you look at how this minimum wage episode went over with Germans.  I noticed someone chatting about their hair stylist and the recent cost increase.  Prior to minimum wage changes.....the rate with this was 27.90 Euro.....after the minimum wage episode went into was 32.90 Euro.  She asked why such a hefty rate surge.....slightly fewer customers now was the answer so they had to make up for the situation.  This drew out the conversation....why fewer customers, and the response from the stylist-boss was that the price was too hefty, thus driving out customers.   I's a stupid argument but this is how people perceive this whole minimum wage change in Germany.

As an American looking over this episode.....Germany has had wage stagnation going on for years.  It's not just minimum wage goes up and down the line.  You could easily walk into a sixty-man business operation and ask anyone who has been in the company for twenty years about their pay-raises.  If you were lucky over a twenty-year period, you might get two or three pay-raises.  German bosses tend to be tough on handing these out.  Finding a German company that gives out a raise every three years?  If they are in a very competitive atmosphere......there might be a few companies that work like this......but the vast majority avoid such situations.

Bottom line?  Somewhere after the spring of 2017.....I expect another 50-cent rise on the German minimum wage.  And that cheapo 14-Euro haircut of mine will rise up to 16-Euro.....because of lesser customers (in theory).  Something isn't right here, but it's hard to say where logic starts and ends.

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