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How the minimum wage has ‘increased productivity’ in Germany

Productivity by German workers has increased since the country introduced a minimum wage in 2015, a study published Tuesday by Anglo-German researchers showed.

Published: 18 February 2020 12:20 CET

How the minimum wage has 'increased productivity' in Germany

Photo: DPA

“Contrary to concerns that marked the debate before the national minimum wage was introduced, we did not find that it led to a reduction in employment,” University College London (UCL) researcher Christian Dustmann said in a statement.

“On the contrary, the minimum wage increased productivity by redistributing workers from less productive to more productive companies,” Dustmann added.

READ ALSO: Minimum wage is turning low-paid mini-jobs into regular work

Once the minimum wage was introduced, some low-wage employees moved to bigger companies where more full-time jobs requiring better qualifications were available, the group from UCL and German Institute for Labour Market Research (IAB) found.

Such firms also pay a higher wage premium for comparable work.

In regions with the lowest average pay before the minimum wage, the introduction of the legal floor shrank the number of very small businesses with three or fewer employees.

But the average size of companies and the average number of workers at bigger businesses grew.

“This improved the mix of companies in these regions,” the researchers argued.

A centrist coalition government between Chancellor Angela Merkel's centre-right CDU party and the centre-left social democrats (SPD) introduced the minimum wage.

Since 2015, minimum hourly pay for the roughly 15 percent of German workers affected has grown from €8.50 to €9.19, with the next revision slated for 2021.

But the minimum wage was introduced during a long period of growth for Europe's largest economy, which squeezed unemployment to around five percent — its lowest level since Germany's 1990 reunification.

“Our results can't necessarily be generalised to other labour markets or other time periods,” warned IAB researcher Matthias Umkehrer.

READ ALSO: Germany's minimum wage to raise twice in 2019, yet poverty persists

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Which Bavaria-based companies regularly hire English speakers?

Munich ranks third in German cities with the highest total GDP, behind Berlin and Hamburg, but in terms of GDP per capita, it’s higher than both of them.

It also consistently ranks high, often highest, in terms of average household income.

As of 2023, nine of the 40 companies listed on DAX, Germany’s stock index, were based in Bavaria. Seven of those are based specifically in Munich.

While Frankfurt is commonly known to be Germany’s business capital, Munich can claim the title of Germany’s insurance capital, which is saying something, as Germany is home to some of the largest insurance firms in the world, like Allianz.

Beyond the state’s capital city, a number of international companies are based elsewhere in Bavaria, particularly in the Franken region, near Nuremberg.

Which companies actively hire English speakers?

Bavaria, and Munich in particular, is home to a number of companies at the forefront of international business. But the state is known for its traditional, sometimes conservative, culture, which affects its business culture as well.

Whereas companies embracing English as their primary business language are easy to find in Berlin, the practice is less common in the south. That said, there are some notable exceptions.

Sportswear giants, Adidas and Puma, both have their headquarters near Nuremberg in Herzogenaurach, and regularly recruit English speaking international talent.

“As an international company, our teams reflect the rich diversity of our consumers and communities,” Jon Greenhalgh, Senior Manager Media Relations for Adidas told The Local. “Fostering a culture of inclusion where we value and leverage differences, ensures that we can authentically engage with our employees and truly connect with our consumers.”

He added that around 40 per cent of Adidas’ Germany-based employees are foreign nationals, from over 100 different countries.

Siemens and BMW rank among Bavaria’s top employers, and are also known to hire their fair share of foreigners.

“In Germany, we recently had around 2,000 open positions,” Konstanze Somborn told The Local on behalf of Siemens AG.

He added that Siemens operates in 190 countries. “That is why we value international teams very much…English as a common language is very usual.”

READ ALSO: ‘Which German companies want to hire foreigners?’

Similarly, BMW hires workers from a variety of backgrounds.

“Every year, we hire lots of internationals and welcome them to the BMW Group,” Dr. Hans-Peter Ketterl, a press spokesman for BMW Group told The Local.

But not all of these positions are available to non-German speakers.

Ketterl added that BMW’s working language is German in the country, even though, “English is an indispensable entry requirement as the second corporate language in many areas of the company.”

Check job boards and follow best practices

If it’s your first time applying for jobs in Germany, make sure to change your resume to the German format, even for English positions.

While Germany is home to its own job boards, like Xing, LinkedIn is probably the best place to start. In addition to searching for positions based in your preferred location, you can check relevant groups, like Munich Startups, to broaden your horizons.

The English Jobs in Germany website is also a good resource to start with.

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