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Mixed feelings as labour market expands

Politicians, labour representatives and employers are looking towards next weekend with varied feelings as the date approaches when people from eight new EU member countries will have the right to work in Germany.

Mixed feelings as labour market expands
Photo: DPA

As of May 1, people from Poland, the Czech Republic, Estonia, Lithuania, Latvia, Slovakia, Hungary and Slovenia, will have the same rights to work in Germany as people from other European Union countries. Until now they have needed a work permit.

This should be regarded as a positive development, according to Gunter Pleuger, president of the Viadrina Europe University in Frankfurt an der Oder – as well as Brandenburg’s state premier Matthias Platzeck.

But trade union Verdi warned that wages could face downward pressure as workers willing to take low pay could distort the German labour market.

Pleuger said May 1 could further the cause of German-Polish integration. He said the German economy needed well-educated and well-trained workers and these could be found in Poland. He said the German-Polish border regions in particular would benefit from the liberalised labour laws.

Platzeck said that if his state could offer attractive working conditions and wages, “we will get expert workers and will be able to reduce our lack of experts with the help of immigration.”

He said he took the fears of some Germans seriously. “Some fear too much immigration. All experience to date would suggest these fears are unfounded,” he said.

The director of the Institute for Labour Market and Careers Research (IAB) Joachim Möller said he also saw the development positively.

“The fear that opening up the labour market for citizens of the new EU member states could lead to low wages in a broad fashion is something I do not share,” he said.

He said this was based on the fact that German minimum standards would apply to those incoming workers as well as for Germans. But he did say he was sceptical on the effects of those with low qualifications, saying they could affected by competition from Eastern Europe.

Labour Minister Ursula von der Leyen told the Frankfurter Allgemeine Zeitung on Sunday she was convinced, “that the workers from the new EU states will help our economic development.”

And Employers’ Association president Dieter Hundt said he welcomed workers from abroad, adding that certain technical posts were crying out to be filled.

Yet Frank Bsirske, head of Verdi said he feared pressure on wages. This threatened, “a downwards spiral in which companies which employ labour from Eastern and Central Europe push out those who pay better wages and offer more social working conditions.”

The number of people who might come to Germany each year thanks to the liberalised work laws remains contested. Von der Leyen and the IAB reckon with 100,000 people per year while Frank-Jürgen Weise, head of the Federal Labour Agency (BA) said he expected up to 140,000 to come.

DAPD/hc

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WORKING IN GERMANY

Five things to know about salaries in Germany

Finding a job is typically a top priority when planning a move to Germany. The country boasts the third largest economy in the world and a continuing need for skilled professionals. 

Five things to know about salaries in Germany

If you are moving to Germany, you might soon start looking for a job in the country. However, like many other aspects of living abroad, there are several cultural differences and specificities when it comes to job hunting in Germany – especially when it comes to salaries.

Here are five things to know about salaries in Germany.

There is a minimum wage in Germany

Germany’s minimum wage of €12.41 per hour, pre-tax came into effect at the start of this year. This amounts to a monthly salary of €2,054 which ranks ninth in the world. The minimum wage will rise again in 2025 to €12.82 per hour before tax deductions.

There have been calls recently to hike the salary up higher to €14 per hour.

READ ALSO: Millions of workers in Germany ‘earning less than €14 per hour’

Find out salary expectations

Germany does not require companies to list salary ranges for listed positions. But that may be changing soon. The EU parliament passed a wage transparency law to require companies to publish annual reports detailing wage and wage discrepancy information. The rules, which are set to go into effect in 2027, are intended to help close the gender pay gap. 

In the meantime, employees can utilise online resources to find industry averages and expectations for different roles:

  • Gehalt.de offers users access to salary information on more than 800 professions
  • Online platform, Kununu provides compensation information and employer reviews to users in the DACH region  
  • Berlin residents can utilise REDSOFA’s salary survey for an overview of salary averages in the country’s capital city

As of April 2023 the average gross monthly salary was €4,323 according to Germany’s Federal Statistical Office.

Two-thirds of full time workers make less than this average monthly salary and one-third of workers earn more than this average monthly salary.

While wages after deductions may be less than similar roles in other countries, it is also important to take into consideration what other benefits come with a salary. Paid holiday leave, pension contributions, long notice periods and annual bonuses can help make up some of that difference. 

READ ALSO: How much do employees in Germany typically earn?

Check your payment schedule

Internationals can usually expect their salary once a month when working in Germany. Many German companies choose to pay employees either on the 1st or 15th of the month. It is also important to note that most employees can expect to receive their first pay check within 30 or 45 days of starting. 

For positions that offer yearly bonuses, these payments are included in a 13th pay check which are subject to income tax.  

A person works on a laptop.

A person works on a laptop. Image by Bartek Zakrzewski from Pixabay

How many hours do you work?

When looking for a job, don’t forget to check how many hours you can expect. Job descriptions will include expectations for time commitments. 

Mini-jobs, as expected from the name, are limited in hours and pay. Employees can expect up to €538 per month. Mini-jobs do not provide social security because they do not require social security contributions. Employees are also not automatically covered by health and nursing care insurance. 

Teilzeit, or part time jobs, are defined as any job where working hours are less than a full time position.

A common misconception is that part-time work requires working 20 hours or less a week. But an employee working five days a week for 30 hours, at a position that is typically 40 hours when full time can also be defined as a part time worker. 

READ ALSO: The rules in Germany around ‘mini’ and ‘midi jobs’

In fact, Germany has a term for workers who work between 28 and 36 hours a week. Vollzeitnahe Teilzeit, or nearly full time part time workers, can be a popular choice for some people, including parents. These positions can give employees more flexibility to balance work and family responsibilities. It is important to note that these workers are paid according to their time worked, so it will still amount to less than full time.

Depending on the work schedule, part time employees can earn the same amount of vacation as their full-time counterparts. That’s because holiday leave is calculated based on days worked, not hours. If a part time worker comes in five days a week, they will be eligible for at least 20 days of holiday. If that same part time worker comes in three days a week, they will be legally entitled to twelve days of vacation, even if they worked the same hours as the other employee. 

In most companies, weekly working hours between 35 and 40 hours are considered full-time employment or Vollzeitbeschäftigung

Watch out for the gross v. net difference

Before you sign the dotted line, it will be important to check how much of your gross salary you’ll be able to keep come pay day. Companies that include salary expectations in descriptions include gross salary (Bruttoeinkommen) – not the net income after taxes and deductions (Nettoeinkommen). The amount deducted will depend on how much you earn, the tax class you’re in and on other factors such as how much you’re paying for healthcare but it is usually around 40 percent. 

Salaried employees can find information on the deductions on their pay slip. Some to expect to see include:

  • Taxes are deducted directly from the gross pay. The amount is based on the tax bracket your salary falls within 
  • A percentage of your gross salary is also deducted for your pension / retirement contributions
  • Church taxes between eight and nine percent of your salary will also be due if you are affiliated with a religion
  • Unemployment insurance amounts to a 2.5 percent deduction from your gross salary. It is important to note that the insurance covers a salary up to €90,600 
  • Health insurance contribution rates are typically split between employers and employees. The rate depends on the provider. In 2024, the TK contribution rate to health insurance is 15.8 percent of the gross income

READ ALSO: What you need to know about your payslip in Germany 

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