Who earns minimum wages in Europe - European Trade Union ...

François Rycx and Stephan Kampelmann
information first has to be hand-collected from collective bargaining
agreements: in Belgium, these are the Conventions Collectives de Travail that
are negotiated in more or less irregular intervals within the different
Commissions Paritaires; in Germany, the data had to be collected from the
Tarifverträge that are negotiated among the social partners at the regional
and sectoral level 7 . We have notably collected information on minimum
wages from collective agreements that were signed in 2007, thereby
circumventing the issue of older agreements that might still be binding but
subject to indexing (which is notably in Belgium a wide-spread phenomenon).
For the case of Belgium, we collected information for around 150 Commission
or Sous-Commission Paritaires. For Germany, recorded the 2007 minimum
wages in more than 70 Tarifbranchen. In light of the marked wage inequality
between the Länder of the former DDR and BRD, we included both the level
of the lowest wage category in both East and West Germany, which means
that we have collected information on around 150 different minima in
Germany and in Belgium, respectively. 8 As a consequence, the average
minimum wages in Table 3 reflect the range of sectoral (and regional) minima
and the distribution of total employment among these different minima. 9
As for the results for our type II countries, Table 3 shows that the range
between the lowest and the highest minimum wage is considerably greater in
Germany than in Belgium: the German lowest minimum in 2007 amounts to
only 3.91 euros and the highest to 12.21 euros. In Belgium, no sectoral
agreement is allowed to undercut the interprofessional minimum wage,
which means that in 2007 no sectoral minimum could be fixed below
7.80 euros. The highest wage floor negotiated during 2007 was equal to
13.21 euros. The weighted averages of sectoral minima were 9.22 and
7.63 euros in Belgium and Germany, respectively.
As discussed in Section 2, absolute levels of minimum wages are not directly
comparable across countries with different wage distributions. The
computation of a Kaitz index is one way to take differences in the overall
shape of the wage distribution into account by comparing the existing
national minima to the correspond median wage. This being said, we have
seen that only very few countries operate a minimum wage system in which a
single rate applies to all employees; in practice, many different rates - and
many different Kaitz indices - co-exist in each country. As a consequence, the
Kaitz indices shown in Table 3 are averages of the multiple Kaitz indices in
7. Although clearly relevant for empirical wages in most of the countries in our study, after
consultations with experts from the European Trade Union Institute in October 2011, we
decided to ignore any further renegotiation of minima that occurs at the firm level.
8. We would like to thank the WSI, and in particular Reinhard Bispinck, for the extremely
helpful assistance in collecting the minimum wages from German Tariff contracts in 2007.
9. Unfortunately, it was not possible for the case of Germany to calculate the employment weight
for each Tarifbranche because the SOEP data on sector of activity is based on the NACE and
not on the system of Tarifbranchen. The weighted average is therefore based on the
distribution of employment among NACE and the correspondence between NACE 2-digit
sectors and Traifbranchen. More detailed information on the weighting procedure can be
obtained from the authors.
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