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comment by rjw
rjw  ·  2117 days ago  ·  link  ·    ·  parent  ·  post: Some thoughts on minimum wage

Interestingly, there is a country that enjoys a higher standard of living than the USA that doesn't (until May 2015, that is) have a minimum wage - Germany. Does anyone here know how their system works?

flagamuffin  ·  2116 days ago  ·  link  ·  

Germany is very odd, because it tends to set wages through collective bargaining on an industry-by-industry basis. De facto minimum wages in a lot of cases. Also, they have a more powerful union presence than the US does, and slightly more of their labor force is unionized.

rjw  ·  2116 days ago  ·  link  ·  

Yeah. There's also the idea of an "immoral wage", which means that you can't pay someone less than 75% of the average wage, for that profession. So that's another constraint on wages.

That said, I wonder why the German government has felt the need to introduce a minimum wage and why it's happening now. Was the old way of negotiating wages not working?

flagamuffin  ·  2116 days ago  ·  link  ·  

From what I've read, some economists thought Germany was running into poverty problems because of their lack of a minimum wage? I'm not sure of the details.

I'm not entirely sure having different minimum wages by industry is a good idea either, because unless done very carefully it adds an exogenous incentive toward certain jobs that can't be good for a free market.

rjw  ·  2115 days ago  ·  link  ·  

Yeah. I think that there should be definitely be a minimum wage, which is pegged to some sort of measure of cost of living. Trade unions can negotiate anything on top of that for their respective professions, but if you're not represented by a powerful union that shouldn't consign you to poverty.

This article http://www.thelocal.de/20131121/germany-to-introduce-minimum-wage has some examples of the really low wages that German workers have had to deal with - office workers receiving €1.37 an hour, delivery drivers receiving €1.55 an hour in Mecklenburg-Vorpommern. This is pretty dreadful. The SPD wants to make the minimum wage €8.50 an hour.