Work Compensation Comparison in Saarland: Earnings Edge Over Basic Income for Citizens - Discussion on Saarland's Minimum Wage versus Citizens' Allowance, focusing on the implications of working more in the region.
In a recent study conducted by the Economic and Social Science Institute (WSI), affiliated with the Hans-Böckler-Foundation, it was found that full-time workers earning the minimum wage in Germany have more disposable income than recipients of citizens' income (unconditional basic income or social welfare payments). This is particularly true in Saarland, where the wage gap between a minimum wage job and citizens' income is 565 euros.
The study took into account tax and social security deductions, and the calculations were based on additional social benefits such as housing benefit, child benefit, or child supplement.
For instance, a single man working full-time (38.2 hours per week) at the minimum wage in Germany would have a disposable income of approximately 1,572 euros per month. In contrast, a single man receiving citizens' income in Germany would have a total income of approximately 1,015 euros per month, which is 557 euros less than with a minimum wage job.
Similarly, a single mother with a five-year-old child in Germany, working full-time at the minimum wage, would have a net income of 1,636 euros. With citizens' income, including basic rates for mother and child, supplement for single parents, housing costs, and immediate allowance, she would receive 1,783 euros. However, this is still 636 euros less than a full-time minimum wage worker.
The regional differences in the wage gap are due to the level of housing costs. The smallest wage gap for a single household is in Munich district, Dachau, and Munich city, at 379 to 444 euros. On the other hand, the highest wage gap is found in Nordhausen and Vogtland district, at 662 and 652 euros, respectively.
WSI director Bettina Kohlrausch emphasized that recipients of unemployment benefits, regardless of household type and region of residence, have less money than those working at minimum wage. She also stated that the claim that people on unemployment benefits can live well is factually incorrect and stigmatizing. Instead, she suggested that there is a need for action in creating affordable housing and qualifying employable people receiving unemployment benefits.
The study contradicts the assumption that citizens' income is so high that the incentive for low-paid work is lacking. However, it highlights the need for a comprehensive review of Germany's social welfare system to ensure it provides a fair and adequate safety net while encouraging employment.
In conclusion, full-time minimum wage workers in Saarland have a generally higher disposable income than citizens' income recipients, despite deductions, due to wage earnings exceeding social welfare payments. This reflects Germany's social policy aimed at incentivizing work while providing a safety net below minimum wage income levels.
In light of these findings, it would be beneficial for the community policy to focus on vocational training programs to equip unemployed individuals with skills needed for low-paid jobs. This could potentially increase their earning potential and reduce the financial disparity between workers and citizens' income recipients. Additionally, biased perceptions about the financial stability of individuals on unemployment benefits should be addressed, calling for an industry-wide effort to fund and implement affordable housing initiatives, as well as financial support for vocational training in business sectors with high employment opportunities.
