Exposed: The Hidden Epidemic of Minimum Wage Evasion Impacting Hundreds of Thousands
Numerous workers denied their legally due minimum wages, leaving hundreds of thousands financially impoverished.
By Christina Lohner
The debate over the minimum wage has taken center stage in the new federal government's coalition negotiations. Currently, all workers aged 18 and above are entitled to a minimum wage of 12.82 euros per hour gross. Yet, estimates suggest that nearly six percent of eligible workers are receiving less, amounting to two million affected individuals in 2021.
The German Institute for Economic Research (DIW) attributes this discrepancy not just to black market work but also to manipulation of documents and employment relationships. The fear of losing their job even drives some individuals to actively participate in this deception.
The Unwanted Stars of the Minimum Wage Show
The Financial Control Schwarzarbeit of the Customs (FKS) conducts checks to ensure compliance with the Minimum Wage Act, initiating 2,759 administrative offense proceedings last year for non-payment of the statutory minimum wage. However, they admit the challenge lies in efficient controls due to a lack of personnel.
The Great Escape: How Companies Dodge the Minimum Wage
Proper documentation of working hours is often inadequate or manipulable, according to DIW expert Johannes Seebauer. Some unscrupulous employers resort to various strategies to bypass the minimum wage. These tactics include:
- Missing, incorrect, or incomplete records of working hours
- Disregarding standby or preparation times and empty runs as working hours according to labor law
- False designation of employees as interns, trainees, or self-employed
- Concealing the main activity of an operation to avoid branch minimum wages
The portal mindestlohnbetrug.de lists additional methods such as establishing unrealistic performance requirements that force employees to work longer hours than required, only to be paid for the agreed hours. In some cases, wage deductions are made for supposedly poor work quality, tools, or work clothing.
Stepstone, a popular job portal, reports that employers sometimes charge their employees excessive prices for materials or food, then deduct these amounts from their wages. In the construction industry, some companies even fake insolvencies to avoid paying final wages, leaving workers, especially foreigners, in a precarious position.
Apart from daily business controls, the FKS regularly conducts national and regional focus inspections. In cases of violations, fines of up to 500,000 euros may be imposed. The most affected sectors include construction, hospitality, building cleaning, logistics, and the gig economy.
The Exceptions to the Rule
Apprentices, the self-employed, those working in voluntary services or workshops for people with disabilities, volunteers, participants in job promotion measures, and long-term unemployed people in the first six months after re-entering the workforce are exempt from minimum wage claims. However, trainees have a claim to the minimum wage under specific conditions.
Rise Above the Shadows: A Call for Action
Economists urge stricter enforcement of minimum wage laws and call for its increase to 15 euros. Despite the challenges, it is crucial to root out practices that exploit and deprive employees of their fair wages. The fight against wage theft requires continuous vigilance and concerted efforts from workers, employers, and government agencies.
- In light of the ongoing debate about minimum wage, it is essential for the new federal government to consider implementing a community policy that supports vocational training initiatives, particularly in industries with high instances of minimum wage evasion, such as construction, hospitality, and logistics.
- As the issue of non-compliance with minimum wage laws becomes more prevalent, it's crucial for policymakers and legislators to address the finance aspect and provide sufficient funding for bodies like the Financial Control Schwarzarbeit of the Customs (FKS) to increase their personnel and improve their ability to efficiently control businesses and enforce minimum wage regulations.
- Given the growing concern over minimum wage evasion in the news, businesses should be encouraged to adhere to sanctioned working practices to ensure fair wages and maintain a positive reputation, thereby contributing to a more general-news worthy, socially responsible business environment.
