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Poverty rises despite more people in work

As figures show an increase in poverty despite record employment rates, and the potential new government argues about a universal minimum wage, German job centres are suing employers for paying less than €2 an hour.

Published: 26 November 2013 14:08 CET
Poverty rises despite more people in work
Employment has reached record levels but wages have stayed low. Photo: DPA

When businesses take on people who have been unemployed, the state will top up low wages via job centres to help them into work, but this has led to many cases where employers are clearly taking advantage of the situation.

Next month a lawyer from Brandenburg will appear in Senftenberg labour court for paying his two office workers an hourly rate of €1.70 – meaning that although they were working, they were almost fully supported by the state.

Last month the same court ordered a firm in Lünnenau to pay a salesman €1,560 in back pay after employing him for just €2.84 an hour. The court said he should have received twice as much. A pizza delivery firm was sued by the Uckermark job centre for paying its workers €1.59, €1.65 and €2.72 an hour.

There are no numbers to show how many people are being paid such pathetic wages, which effectively condemns them to remain dependent on subsistence-level government top-ups, but Berlin and Brandenburg state governments are setting up a working group on the matter.

Such wages, along with part-time jobs and shift-work are some of the reasons why statistics show that although there are more jobs in Germany than ever, the risk of being poor here has risen slightly.

The 'Data Report 2013' issued by the National Statistics Office, shows that last year 41.6 million people in Germany had a job – more than ever before, the Süddeutsche newspaper reported on Tuesday.

But at the same time the risk of being poor was rising – 16.1 percent of people in Germany were officially classified as 'poverty endangered' – a rise of 0.9 percent on the figure from 2007. Those who had less than €980 a month were considered poor.

Those most at risk were people between 18 and 24, as they were most likely to be in education or training – and people between 55 and 64. Women were also significantly more likely to be poor than men, the numbers showed.

Being poor means people die earlier than those with more money, the figures also showed. Men in the lowest income group died nearly 11 years earlier than those with more money. For women the cost was eight years of life.

Germany's main two political parties are this week wrangling over whether to introduce a universal minimum wage, which the Social Democrats have long called to be set at €8.50 an hour.

READ MORE: Germany to introduce minimum wage

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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. 

Published: 2 May 2024 12:26 CEST
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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