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Ifo Personnel Manager Survey for Quarter 1 2014: "Flexibility in Personnel Deployment"

Influence of a National Minimum Wage on Staff Numbers

The current German federal government’s coalition agreement stipulates the introduction of a national minimum wage as of 2015. The special question for quarter 1 2014 asks companies how they expect their workforce to change this year and in 2015 against the background of the minimum wage plans.

It is worth noting that although companies were asked about the influence on their personnel plans, conclusions cannot be drawn as to the scope of any expected changes.

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According to the survey results, the introduction of a nationwide minimum wage, as provided for in the coalition agreement, is not expected to have any noteworthy impact on the majority of companies. 87% of the companies surveyed reported that they expect average staff numbers to remain the same over the course of the year. Around 5% of survey participants believe that their staff numbers could fall this year due to the introduction of a national minimum wage. Around 2% expect staff numbers to increase; while 6% did not respond. There were no deviations from the average figures cited across economic sectors and among companies of different sizes.

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The evaluation of the survey results also revealed that any effects should be somewhat clearer as of next year (2015). When surveyed on the influence on employment as of 2015, around 11% of companies reported that their staff numbers are expected to fall. The number of companies that expected staff numbers to rise in their company with the introduction of a nationwide minimum wage was once again 2%. Around 8% of companies did not respond. On average 80% of personnel managers expect the planned minimum wage to have no effect. As far as the economic sectors are concerned, the share of companies that expect staff numbers to fall was lowest in manufacturing at 7%, while this figure was 14% in distribution. Differentiated according to the number of employees, the share of companies that expect staff numbers to fall following the introduction of a nationwide minimum wage was far higher in companies with fewer employees than in those with a large number of staff. Only 4% of companies with 500+ employees reported plans to reduce staff numbers, while around 13% of personnel managers in companies with fewer than 50 employees expected the workforce to shrink.

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A large number of comments suggests that the minimum wage plans cited above are expected to have no impact on several branches, since other regulations like sectoral agreements are already in place that establish a higher wage than the € 8.50 per hour stipulated in the coalition agreement; and because the wages in some sectors are far above the planned minimum wage in any case. Isolated comments, however, do point to drastic consequences like extensive job cuts. According to companies, the planned minimum wage law will particularly affect areas in which low-skilled workers are employed and will lead to the streamlining of personnel and lower employment rates. Moreover, several comments indicate that a valid minimum wage for trainees would also make companies less willing to hire them.

Contact:

Anita Jacob-Puchalska

Ifo Institute
Ifo Center for Industrial Organisation and New Technologies
Phone: +49(0)89/9224-1336
Fax: +49(0)89/985369
Email: jacob-puchalska @ ifo.de
Website


Short URL: www.ifo.de/w/JDo4QBRL