
Germany to introduce minimum wage - lelf
http://www.thelocal.de/20131121/germany-to-introduce-minimum-wage
======
billyjobob
I don't know about Germany, but in the UK the minimum wage is so low that it
isn't enough to live on and the government have to make welfare benefit
payments so that the people on minimum wage can survive. Businesses are only
able to pay such low wages because the government effectively subsidizes them.

Also there are a lot of loopholes in the law, e.g. workers on the government
'work programme' can be paid less than the minimum wage. Interns are supposed
to be paid minimum wage, but most are not paid anything at all and the only
consequence is that the government writes a stern letter to their employers.

~~~
byoung2
_I don 't know about Germany, but in the UK the minimum wage is so low that it
isn't enough to live on and the government have to make welfare benefit
payments so that the people on minimum wage can survive._

That is also true in many parts of the US. In California, it is currently
$8/hr, which means if you are able to work 40 hours a week (likely across two
employers), you make $16,640 per year. At that income, you couldn't afford to
live alone in Los Angeles, where a studio apartment would cost $1200/month,
which is already 86% of your income. You could, however, qualify for
subsidized housing, which would pay 80% of your rent, nutrition assistance
which would give you a few hundred dollars per month to buy groceries, and
recently, subsidized health insurance that would give you a basic HMO plan for
free. In effect, the government (federal, state, county, and city) is
basically matching the employer dollar for dollar for many minimum wage
employees.

~~~
forktheif
UK minimum wage is £6.31 an hour which converts to $10.24, so slightly higher.
Though maybe that conversion is too simplistic.

~~~
byoung2
The cost of living is likely higher in the UK. Even in Los Angeles you can get
a pint of beer for $4 or a six pack for $8. That is a good benchmark for
minimum wages.
[http://www.courthousenews.com/2013/11/08/62761.htm](http://www.courthousenews.com/2013/11/08/62761.htm)

~~~
mjn
If that were the benchmark, Copenhagen is cheap! You can get a six-pack of
Tuborg or Heineken for about $7-8, including tax, and any kind of normal local
pub will have half-liters at $4-5 (though prices can go up to $10+ at fancy
bars). That makes the $20/hr minimum wage look quite nice relative to costs:
about three six-packs per hour of work!

However, some other things are expensive, such as housing.

------
rayiner
See:
[http://www.forbes.com/sites/leonardburman/2012/03/14/raising...](http://www.forbes.com/sites/leonardburman/2012/03/14/raising-
the-minimum-wage-in-new-york-would-be-risky).

I don't think the minimum wage has been a great success anywhere it's been
implemented, so I'm a bit surprised Germany would adopt it now instead of
trying something more forward-looking. The conservatives in Germany could have
preempted this I think by proposing some sort of minimum income like in
Switzerland.

~~~
msandford
I wish we'd just get to the core of the problem, big big inflation via the Fed
destroying the purchasing power of the dollar and various other central banks
following suit in their own currencies.

If you get new dollars first when they're more valuable, life is TOTALLY RAD.
You get to spend the new money before it works its way through the system. So
you're spending post-inflation money but getting pre-inflation prices. Yum.

If you don't get the new dollars first then what tends to happen is that your
costs go up before your income does. This is not a good situation for a
business to be in and it's not good for an individual either.

Imagine that you are trying to make a startup work and every month your COGS
goes up 10% but you can only increase the prices you charge on a 6-18 month
lag. You might run out of cash covering your increased costs long before you
can raise your prices and make up the difference.

This is roughly how household finances have been playing out for quite a few
years now. At least ~40 or so years since Nixon closed the gold window, but
maybe up to ~100 years since the founding of the Fed.

EDIT: If you want to downvote me could you at least tell me why? I'd like to
be a good citizen on HN and downvotes without comment don't explain anything.

~~~
lolcraft
Because this is a common misconception about economics that drives me nut. On
second thought, I'm definitely too trigger happy. Let me explain:

Inflation has never been a problem since Paul Volcker in 1982. In fact, the
moniker Great Moderation should be more properly called Great Moderation of
Inflation -- since not much was moderate apart from that, as exemplified by
the crashes of 1987 and 2008, and the bubbles; but I digress.

We had about 10, 20 years of the lowest level of inflation in history across
the board, maybe 2% per annum or so. Everyone nowadays is obsessed with
Zimbabwe, or the ex-Soviet Unions, or the Diocletian Roman Empire, but those
are red herrings, minor blips in a sea of (excessive) financial restraint.
Inflation is not a problem today.

In fact, _deflation_ is a problem today. Large part of the German
restructuring, so lauded everywhere, was helped by inflation in Spain and
Italy. (Granted, it wasn't much, maybe 4% per year, but even so.) Now the ECB
refuses to return the favor: the ECB won't let inflation go above 2%, twisting
the knife in Southern Europe's rib-cage and pissing everyone off. Meanwhile,
the US, as most of the West and Japan, remains eyeballs deep in a liquidity
trap: you could print the equivalent of the Michigan Lake in one dollar bills,
and the Consumer Price Index wouldn't register a blip.

 _If_ your start-up were a big bank, you could tomorrow borrow money from the
government at a _real negative rate_. You could borrow a billion dollars,
store it in a bank account, pay in 10 years the principal and profit
handsomely with the interest. For nothing. That's how low inflation is, today.
The Fed is (used to be) desperately trying to increase it, as we speak, with
not much effect.

In economic terms, a moderate (actually very low, in historical terms) 4% rate
across the board would in fact benefit the system. If you can profit decently
by storing money, nobody wants to get their lazy asses from the couch and
invest. And the guys who have money don't want to spend it, either -- they're
winning money, why spend? Thus a crisis. You have to whip their asses with the
printing press, so that they don't get cozy.

~~~
msandford
Okay, we have really different views on economics. I would tend to disagree
philosophically with the idea that "you have to whip their asses with the
printing press" and as a result you and I probably won't agree on anything.
That's OK, we don't have to.

I take the position that economic output driven my market manipulation (money
printing, fixing the interest rate, driving inflation, etc) is undesirable
because it sends signals to people about profits or losses or the amount of
real resources available via the interest rate that aren't necessarily
representative of reality. An example:

In magic-land there is no Fed and the interest rate is a number that clears
the market between lenders and borrowers. As people save money they increase
the amount of cash that banks have on hand. While they're saving money,
they're not spending it and thus some amount of resources are piling up in the
real world too, in unison with the amount of savings in the bank. As the
banks' cash on hand goes up and nobody is borrowing, they will tend to reduce
the rate of interest charged to induce more people to borrow, and reduce the
rate of interest paid to reduce people's predilection to save. This causes the
money to go to work, and at the same time, those resources which were piled up
unused in the real world (in parallel with the money) were also put to work.
To me this is a good thing, that stockpiles of money in the bank mirror
stockpiles of raw materials in the real world as a result of people's reduced
consumption and increased savings.

Now introduce the Fed which by virtue of it's ability to print money can cause
bank deposits to increase while the raw materials don't pile up similarly.
This causes all kinds of incorrect signals to propagate through socioeconomic
life and induces people to make "bad" decisions. In my view this is
unfortunate to have people making decisions thinking that the world is one way
when in fact it is not, and perhaps going bankrupt as a result.

I imagine there might be disagreement about the relative importance of
signalling vs. just making sure that money circulates, no matter what to keep
the economy going. But would you disagree that the interest rate -- in the
absence of a body which fixes the interest rate -- could tend to serve as a
signal for the amount of under/over consumption that's happening in society?
If so, why? And if you agree that it could, why is it not harmful to change
that signal artificially?

EDIT: Even though I don't think we'll agree, thanks for explaining. Much
appreciated.

------
jsnk
Wow, that's amazing that Germany never had minimum wage!

To be honest, this seems like a good example that not having minimum wage
doesn't necessarily lead to pre-industrial age wage slavery that academics are
always worried should minimum wage disappear.

~~~
elnate
That was prevented only because of strong unions effectively setting a minimum
wage for their industries. Hence why non union workers where getting shafted.

~~~
onli
The history of early unions in Germany is btw quite interesting, especially in
Weimar and before WW I, if I'm not mistaken. It is not so long ago that
workers had to seriously strike to achieve any improvements of unimaginable
horrible work conditions. And it is not so long ago that the german army was
used to end those strikes using lethal force.

Especially the Ruhrgebiet has quite some stories of that regard. It shines an
interesting light on the history of the german social democrats and their
relationship to the communist party, given both their interest in the approval
of the workers, and is a - mildly put - embarrassing comparison to the state
of the modern SPD and its political vision (its Gestaltungswille).

Might be a bit OT for non-germans, but most countries - apart from the USA,
afaik - should have a similar part of their history.

~~~
yk
Actually the US had a rather strong worker movement, it just played out quite
differently than in Europe. So in the US the unions did quite often manage to
get a corporate pension plan, while the European ones did get a government
pensions. Similar with health care and many work place regulations.

~~~
mjn
The U.S. labor movement did used to be stronger than it is now, but it was
never really _that_ strong. At the peak in the 1950s, about 35% of workers
worked in unionized workplaces. That's a very low figure for Europe, where
typically 70%+ of workers work in unionized workplaces (here in Denmark it is
80-90%).

------
mathattack
This concept is very strange to me, as Germany is generally considered to be a
high-efficiency high-wage country. I wonder if this comes from social pressure
of supporting so many high-social-welfare countries.

------
Vitaly
Germany of all places? Thats the one economy in Europe that actually seems to
work quite well. Why try to "fix" it?

------
fleitz
As much as I'd love to talk about this it seems much more political than tech
related, are there any issues of tech workers getting less than 8.50? What's
the angle...

~~~
mordae
Probably not.

On the other hand, our team of senior Linux administrators get 7 EUR per hour
each in Prague, just 350km from Berlin. It's always interesting to hear about
wages in other parts of the world. Puts things into perspective...

~~~
auctiontheory
_our team of senior Linux administrators get 7 EUR per hour each in Prague_

Wow. Just wow. Wikipedia says that they're making far less than the per-capita
income for the Czech Republic. Presumably they speak English - why do they
stay, rather than move elsewhere in the EU? (In Silicon Valley, the same job
would pay multiples of the mean income.)

More selfishly, assuming you aren't there yourself, how do you go about
finding Eastern European technical talent, which everyone speaks so highly
about?

~~~
gordaco
I can't speak for them, but don't underestimate the reasons people may have
for staying in their country, and don't overestimate their appreciation for
money.

I make about the mean income in my country (which is quite a few k€ above the
median). I know for a fact that I could go to other parts of Europe and earn
possibly twice or more, but I don't think I'm going to do so in the near
future. Here I have my family, my friends and my climate. There awaits me a
bigger amount of money... that I have no real use for.

------
bentruyman
How does Germany calculate "unemployment" differently from the United States?

[http://www.wolframalpha.com/input/?i=germany+vs+united+state...](http://www.wolframalpha.com/input/?i=germany+vs+united+states+unemployment)

~~~
yk
You should use the unemployment rate, since the US are several times larger
than Germany. Apart from that, I think that German unemployment is compiled by
some government office, who use the actual numbers of people who get
unemployment benefits, while in the US telephone surveys used.

[http://www.wolframalpha.com/input/?i=germany+vs+united+state...](http://www.wolframalpha.com/input/?i=germany+vs+united+states+unemployment+rate)

