How to define a Minimum Wage

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How to define a Minimum Wage Experiences from
Germany and other European Countries
Dr. Thorsten Schulten

• Association of Free Trade Unions of Slovenia
  (ZSSS)
• Friedrich Ebert Stiftung
• International Conference on Minimum
  WagesLjubljana, 16 June 2015

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Content

• Minimum Wages in EuropeProblems of Comparison
• How to define a minimum wage?Views of the
  European Court of JusticeExperiences from
  Germany and other European Countries

Dr. Thorsten Schulten
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National Minimum Wages in Europe(per hour, in
Euro, January 2015)
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Dr. Thorsten Schulten
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National Minimum Wages in EuropeProblems of
Comparison

• Comparison in Euro Influenced by exchange rate
• Different costs of living

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Dr. Thorsten Schulten
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National Minimum Wages in Europe(per hour, in
Purchasing Power Parities, January 2015)
Source WSI Minimum Wage Database 2015
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Dr. Thorsten Schulten
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National Minimum Wages in EuropeProblems of
Comparison

• Comparison in Euro Influenced by exchange rate
• Different costs of living
• Different relative valuesIn comparison to
  average or median wages

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Dr. Thorsten Schulten
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Relative Level of Minimum WagesMinimum wage in
of median wage, 2013
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Relative Level of Minimum WagesMinimum wage in
of median wage, 2013
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National Minimum Wages in EuropeProblems of
Comparison

• Comparison in Euro Influenced by exchange rate
• Different costs of living
• Different relative valuesIn comparison to
  average or median wages
• Different scope of the minimum wageExclusion of
  certain groups of workers
• Different definitions of minimum wagesWhich wage
  components are includedand which not?

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Dr. Thorsten Schulten
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Content

• Minimum Wages in EuropeProblems of Comparison
• How to define a minimum wage?Views of the
  European Court of JusticeExperiences from
  Germany and other European Countries

Dr. Thorsten Schulten
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Minimum Wage in Germany

• New Statutory Minimum wage of 8,50 Euro per
  hour(from 1 January 2015)
• German Minimum Wage Actinclude no definition of
  a minimum wage, but refers tothe Law on Posted
  Workers
• German Government says that the definition of a
  minimum wage has been has been clarified by
  jurisdiction of the European Court of Justiceand
  the German Federal Labour Court

Dr. Thorsten Schulten
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How to define a minimum wage?
European Posted Workers Directive
(96/71/EG) For the purposes of this Directive,
the concept of minimum rates of pay is defined
by the national law and/or practice of the Member
State to whose territory the worker is posted
(Article 3).
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Dr. Thorsten Schulten
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How to define a minimum wage?
Jurisdiction of the European Court of
Justice Case C341/02 Commission v. Germany, 14
April 2015 Case C-522/12 Isbir v. DB Services
GmbH, 7 November 2013 Case C-396/13 Sähköalojen
ammattiliitto ry v. Elektrobudowa Spólka
Akcyjna12 February 2015
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Dr. Thorsten Schulten
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How to define a minimum wage?
European Court of Justice Case C341/02 Commission
v. Germany (14. April 2005) It is entirely
normal that, if an employer requires a worker to
carry out additional work or to work under
particular conditions, compensation must be
provided to the worker for that additional
service without its being taken into account for
the purpose of calculating the minimum wage.
(Recital 40)
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Dr. Thorsten Schulten
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How to define a minimum wage?

• European Court of Justice
• Case C341/02
• Commission v. Germany (14. April 2005)
• Judgment follows the principle that minimum wages
  can include all wage components which do not
  alter the relationship between the service
  provided by the worker and the consideration
  which that worker receive in return. (Recital
  43)
• Every work which is in addition to normal work
  can not be include in the minimum wage and has to
  be paid extra !!!

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Dr. Thorsten Schulten
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How to define a minimum wage?
European Court of Justice Case C-522/12 Isbir v.
DB Services GmbH, (7 November 2013) In that
regard, the Court held that it was normal that,
if an employer requires a worker to carry out
additional work or to work under particular
conditions, compensation must be provided to the
worker for that additional service without its
being taken into account for the purpose of
calculating the minimum wage. (Recital 39)
16 06 2015
Dr. Thorsten Schulten
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How to define a minimum wage?
European Court of Justice Case C-396/13
Sähköalojen ammattiliitto ry v. Elektrobudowa
Spólka Akcyjna(12 February 2015) According to
the Courts settled case-law, allowances and
supplements which are not defined as being
constituent elements of the minimum wage by the
law or practice of the Member State to whose
territory the worker is posted, and which alter
the relationship between the service provided by
the worker, on the one hand, and the
consideration which he receives in return for
that service, on the other, cannot under the
provisions of Directive 96/71, be considered to
be elements of that kind (Recital 36)
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Dr. Thorsten Schulten
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Calculation of the German Minimum Wage
As a rule, those employer payments that are paid
in compensation for the employees normal work
are to be counted as components of the minimum
wage. Payments that an employee receives as
compensation for work beyond this may not be
counted as part of the minimum Wage. German
Ministry of Labour (2015)
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Dr. Thorsten Schulten
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Calculation of the German Minimum Wage
Can be considered Can not be considered
Basic remuneration Overtime bonuses
Lump-sum payments Bonuses for night or weekend work
Guaranteed bonuses paid on a regular (monthly) basis Bonuses for heavy and dangerous work Annual bonuses (Christmas and holiday bonus) Tips
  Compensations for additional costs (e.g. work wear, work equipment, travel costs etc.)
  Additional company pensions
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Dr. Thorsten Schulten
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Can Bonuses for Work during Nights, Sundays or
Public Holidays be included into the
Calculation of the Minimum Wage?
Non! No! Nee! Nein!
Bonuses for work during special working times
are not part of the minimum wage, buthave to be
paid extra !!!
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Dr. Thorsten Schulten
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Conclusion Why a precise definition of the
Minimum Wage is so important?
Fairness for WorkersExtra work should be paid
extra! Control and EnforcementUnclear
definitions give opportunities to circumvent the
Minimum Wage Law
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Dr. Thorsten Schulten
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WSI Minimum Wage Database
Current Minimum Wage Data from 30 Countries!
Available in English!
http//www.boeckler.de/wsi-tarifarchiv_44064.htm
Dr. Thorsten Schulten
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Contact and Further Reading
Social Europe9 April 2015
New Book
FES-Studies
Dr. Thorsten Schulten Thorsten-Schulten_at_boeckle
r.de
Dr. Thorsten Schulten