Low-Wage Work in Germany

Low-Wage Work in Germany

Gerhard Bosch
Claudia Weinkopf
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  • Book Info
    Low-Wage Work in Germany
    Book Description:

    In recent years, the German government has intentionally expanded the low-wage work sector in an effort to reduce exceptionally high levels of unemployment. As a result, the share of the German workforce employed in low-paying jobs now rivals that of the United States. Low Wage Work in Germany examines both the federal policies and changing economic conditions that have driven this increase in low-wage work. The new “mini-job” reflects the federal government’s attempt to make certain low-paying jobs attractive to both employers and employees. Employers pay a low flat rate for benefits, and employees, who work a limited number of hours per week, are exempt from social security and tax contributions. Other factors, including slow economic growth, a declining collective bargaining system, and the influx of foreign workers, also contribute to the growing incidence of low-wage work. Yet while both Germany and the U.S. have large shares of low-wage workers, German workers receive health insurance, four weeks of paid vacation, and generous old age support—benefits most low-wage workers in the U.S. can only dream of. The German experience offers an important opportunity to explore difficult trade-offs between unemployment and low-wage work.

    eISBN: 978-1-61044-076-9
    Subjects: Business

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. About the Authors
    (pp. vii-viii)
  4. INTRODUCTION The German Story
    (pp. 1-14)
    Robert Solow

    By any reasonable standard definition of “low-wage work,” about a quarter of American wage earners are low-wage workers. The corresponding figure is smaller, sometimes much smaller, in other comparable advanced capitalist countries. This fact is not very good for the self-image of Americans. It does not seem to be what is meant by “crown(ing) thy good with brotherhood, from sea to shining sea.” The paradox, if that is the right word, is the starting point for the extensive study of which this book is an important part. What are the comparative facts, what do they mean, and why do they...

  5. Preface
    (pp. 15-18)
    Gerhard Bosch and Claudia Weinkopf
  6. CHAPTER 1 Low-Wage Work in Germany: An Overview
    (pp. 19-112)
    Gerhard Bosch and Thorsten Kalina

    Germany was long regarded as a country with relatively low income inequality. According to studies by the Organization for Economic Cooperation and Development (OECD 1996, 1997), income inequality in Germany was still declining between 1980 and 1995, bucking the global trend. Only the Scandinavian countries had a narrower income spread and lower shares of low-paid workers than Germany. Furthermore, the opportunities for low-paid workers in Germany to move up to more highly paid jobs were considerably greater than in the United States or the United Kingdom (OECD 1997, 31). This rosy picture of Germany has now changed. The share of...

  7. CHAPTER 2 Pay in Customer Services Under Pressure: Call Center Agents
    (pp. 113-146)
    Claudia Weinkopf

    Call centers have certain features that set them apart from the other industries under study. They do not in fact constitute an industry as such, but a specific form of work organization. Telephone customer inquiries, which formerly used to be scattered among the various departments of companies, are centralized in a call center. Very frequently the goals behind this decision are to intensify the company’s customer orientation, on the one hand, and to handle customer communication more cost-effectively and efficiently, on the other hand. Call centers may be either units within existing companies in various industries or new independent service...

  8. CHAPTER 3 Wild West Conditions in Germany?! Low-Skill Jobs in Food Processing
    (pp. 147-176)
    Lars Czommer

    Wild West Conditions in Germany” ran the headline of a January 2005 article in the German weekly loadSTERNon the German meat processing industry. The quotation came from Danish trade union boss Peter Bostrup, who had said, referring to Tulip and Danish Crown, the two Danish meat processing companies that had transferred many jobs to Germany in order to cut costs: “It’s like the Wild West in Germany and they’re paying starvation wages there.” On the same subject, the largest Danish daily newspaper,Jyllands-Posten, wrote: “German abattoir workers cost a third as much as Danish workers.” The background to...

  9. CHAPTER 4 The Polarization of Working Conditions: Cleaners and Nursing Assistants in Hospitals
    (pp. 177-213)
    Karen Jaehrling

    The hospital sector is not one of the typical low-wage sectors, but it is traditionally characterized by low wage differentiation, a core feature of “German capitalism” (Streeck 1997). For a long period, even the two groups of employees who are the focus of this chapter, nursing assistants and cleaning staff, generally received collectively agreed wages, which after a certain length of employment were only a little below the entry-level wages for qualified nurses; sometimes they even exceeded this level. These wage levels prevailed at both for-profit and nonprofit private hospitals, since they regularly adopted the agreed wage levels for the...

  10. CHAPTER 5 Still Lost and Forgotten? The Work of Hotel Room Attendants in Germany
    (pp. 214-252)
    Achim Vanselow

    In Franz Kafka’s novelThe Castle, written in the early 1920s, Pepi the chambermaid wrestles with her fate: “As a chambermaid one did in time come to feel one was quite lost and forgotten; it was like working down a mine” (Kafka 1988, 379). Pepi feels that she is “invisible,” working hard without much recognition and little hope to make a better life. This example illustrates that room-cleaning work in German hospitality has always been associated with low social status.¹ In the early days of the labor movement in this business, the trade union had to fight simply to ensure...

  11. CHAPTER 6 Low-Paid but Committed to the Industry: Salespeople in the Retail Sector
    (pp. 253-287)
    Dorothea Voss-Dahm

    Reports on the Wal-Mart system do not sound at all unfamiliar to German ears. In Germany, as in the United States, large retail companies are growing primarily by squeezing out smaller retailers, and that growth is also being achieved by means of an approach to competition based on aggressive price cutting (Lichtenstein 2006). In 2004, 40 percent of sales in the German food retail trade were captured by discounters—that is, companies that offer mass-consumption goods at permanently low prices and on a self-service basis. Thus, the discount principle in its pure form is also known and in widespread use...

  12. CHAPTER 7 Summary and Conclusions
    (pp. 288-314)
    Gerhard Bosch and Claudia Weinkopf

    Germany has long been noted for its well-balanced income structure. Between the 1980s and the early 1990s, the share of low-paid workers actually declined, albeit only slightly, against the general international trend. In most OECD countries, including the United States, income inequality increased, particularly in the 1980s (CBO 2006; OECD 1996, 1997). However, the trend has now reversed. Since the mid-1990s, low-wage work has been rising in Germany, whereas in most other EU-15 countries, and in the United States as well, the share of low-paid workers has fallen. In the year 2000, low-wage work in Germany actually exceeded the EU...

  13. Index
    (pp. 315-328)