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Why the statutory minimum wage is so often circumvented


At least twelve euros an hour for everyone: That is the idea behind the mandatory minimum wage. But commitment has its gaps. Employers have tricks they can use to undermine minimum wages.

Tuesday morning in Frankfurt: civilian customs vehicles are on their way to one of the city’s largest construction sites – a raid by the financial control agency on illegal work. “We are investigating a suspicion of breaches of work contracts,” says Arne Niestrath from the main customs office in Frankfurt. All threads come together with him. But it’s not just suspicion. They will now have to control 260 people, as well as the site management. On site, the first step is to collect all personal data and check the construction documents.

Later, the officials will need days to evaluate everything. If they have recorded everyone at all, word quickly gets around about the control on the construction site, and then “workers sometimes disappear into some hiding place,” explains Niestrath. “They know their way around here better than we do.” Frustration resonates as he says this.

Advice for those seeking help

Antonio (Name changed by editors). He doesn’t want to say where he worked, nor his real name. He is one of the few who eventually found their way to the “Fair Mobility” advice center.

The advice center is intended for workers from Eastern and Central Europe and is affiliated with the German Federation of Trade Unions. She provides information on labor rights and provides support in the event of conflicts. Antonio is enlightened in his mother tongue; he does not yet know whether he has the courage to demand his rights from his employer.

The minimum wage goes up.

One inscrutable authority

Antonio has never been caught in a customs control. Does he think that’s good or bad? He does not know. He has no employment contract, no fixed working hours. And he is not paid per hour, but per square meter. Extrapolated to his working hours, that’s sometimes 3.50 euros, sometimes five euros an hour. But then he admits that an inspection “may have helped” him. But the controls have gone down over the past ten years: nationwide from almost 63,000 to almost 53,000 annually. One reason: there is a lack of staff.

But that’s not all, criticizes Frank Buckenhofer, who is responsible for customs at the police union. He speaks of a “patchwork” in the authority. “Customs have essentially organized themselves as a patchwork and – that’s one of the big problems – without any real clout.” He calls for an overarching financial police with the appropriate powers.

Often several violations of the law

The minimum wage violation rarely comes alone. Tax evasion, withholding wage payments, social security contributions: they have to take a close look at the financial control of undeclared work. It takes days for them to compare the data recorded on the Frankfurt construction site with other authorities.

The preliminary balance: 179 violations of the minimum wage, 71 bogus self-employed, four illegally employed. Sounds like great success – but in view of a nationwide clearance rate of less than 0.5 percent, the weakness of the system is clear.

Cheated up to three million people out of their money

According to a survey by the German Institute for Economic Research (DIW), between 750,000 and more than three million employees are cheated of their money. “The range is so wide because illegal activities are so difficult to record,” says Johannes Seebauer from the DIW. In addition, since the introduction of the minimum wage, the number of jobs in low-wage sectors has actually increased. It affects mini-jobbers, students, pensioners and people who do not speak German.

For Antonio, the employer’s violations mean less pension contributions, less sick pay, less holiday pay. At least officially. He has never heard of holiday pay, and no money was paid in the event of illness. Now he wants to look for another job on a construction site. He wants to keep an eye on his rights this time. It won’t be difficult to find something new, because workers like him are desperately needed right now.

Digital capture might help

Digital capture would not make cheating on the minimum wage impossible, but it would make it more difficult. This is shown by examples such as that of a brewery in Oberursel. Anyone who has started work checks in – whether permanent employee or temporary worker. With a total of almost 80 employees, the digital time clock only brings advantages for the landlord, Thomas Studanski: “Before there were always discussions, ‘I was there for such and such a long time, I worked for such and such a time’. That’s gone.” And he also sees an advantage for his operations: he no longer has to fill out time sheets.

That’s how it should be across the board, but far from it. Just ten euros in cash instead of twelve euros minimum wage: This is not only found in the catering and construction industries. Wage dumping is a mass phenomenon and the list of industries affected is long.