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Minimum wage increases productivity in Germany, study finds

2020-02-18T15:22:17.445Z

Contrary to the fear of a “drop in employment”, the introduction of a minimum wage in Germany in 2015 had the opposite effects according to English and German researchers by pushing the



German Interior Minister Thomas de Maiziere (L) in discussion with German Chancellor Angela Merkel during a plenary session in the Lower House of Parliament on July 3, 2014 in Berlin before German lawmakers vote on a bill for a national minimum wage. - CLEMENS BALANCE SHEET / AFP

The introduction of a minimum wage in 2015 in Germany has increased labor productivity in the country, by encouraging employees to change companies, according to a study by German and English researchers published Tuesday.

Contrary to fears expressed before the introduction of a minimum wage in Germany, it "did not lead to a drop in employment," said Christian Dustmann of University College London (UCL) in a statement. .

Migration of employees "to more productive companies"

This measure even led to "increasing the overall efficiency of production through the redistribution of workers from less productive companies to more productive companies," he adds. Following the introduction of the minimum wage, some low-wage workers migrated to larger firms with more full-time, better-qualified jobs, as well as a higher wage premium for comparable work. observed researchers from UCL and the German Institute for the Labor Market (IAB).

In regions where the average wage was more modest and where the introduction of a minimum wage weighed more, there was a decline in the number of small firms with fewer than three employees to the benefit of that of large firms, improving the "Mix" of companies in these regions, the study still reveals.

In a context of sustained growth

The grand coalition government of Angela Merkel had passed the law in 2014, which came into force on January 1, 2015, providing for the introduction of a minimum wage of 8.50 euros per hour from which 15% of employees of the countries, who were earning lower wages. The “Mindestlohn” was then increased to 8.84 euros in 2017 and then to 9.19 euros in January 2019, the next biennial revision being planned for 2021.

The introduction of the minimum wage took place while the German economy was going through a cycle of sustained growth while the unemployment rate fell to 5%, its lowest level since the reunification of the country in 1990. Also, Results of the study "cannot necessarily be generalized for other labor markets or other periods", warns Matthias Umkehrer, of the IAB.

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Source: 20minf

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