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The Minimum Wage in Germany: What Brought the State In?


April 29, 2015
12:15pm - 1:45pm
Hoffmann Room, Busch Hall
April 29, 2015
12:15pm - 1:45pm
Hoffmann Room, Busch Hall

This paper addresses two questions about the recent introduction of a statutory national minimum wage in Germany: what was the basis for political agreement on the measure, and why did employers and unions fail to ‘self-regulate’ as accounts of German ‘coordinated capitalism’ might lead us to expect? The discussion shows that there has been a loss of self-regulatory capacity in the peripheral labour market, despite the maintenance of coordination in the core. At the same time, political preferences have shifted against the deregulatory thrust of the Hartz reforms in the early 2000s, as least partly because of the fiscal externalities of low pay. However, political agreement is evidently not expected to last: future increases in the minimum wage will be decided by employer and union representatives. They might not internalise fiscal externalities, nor indeed be able to reach consensual decisions.

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