The German trade union confederation, the DGB, represents the country’s powerful labor organizations. When Reiner Hoffmann took its helm in May 2014, he was just in time to oversee the final negotiations over the first ever minimum wage in Germany, a measure that became law in 2015 and that unions celebrated as an historic breakthrough.
The minimum wage was not such a victory for Ingo Kramer, chairman of the confederation of German employers’ associations since 2013 . The employers opposed the mandatory introduction of a nationwide minimum wage of €8.50 ($9) an hour, and pleaded for individual sector agreements instead. Now that they have lost the initial battle, the group is calling for adjustments to the existing law.
Both sat down for an interview with weekly business magazine WirtschaftsWoche to discuss the current state of labor relations, the future of temporary labor, the minimum wage, and the merit of striking smaller unions.
WirtschaftsWoche: Mr. Hoffmann, can you imagine a world where Ingo Kramer says “The minimum wage is one of the greatest achievements of the welfare state”?
Mr. Hoffmann: You might be disappointed, but actually I can. After all, many of the gloomy predictions of how terrible everything will be with the minimum wage have not materialized, and won’t materialize. The rate of €8.50 creates a clean competitive base – employers benefit from that a lot as well.
Mr. Kramer: I have to add something right there. The question is missing two crucial words: legally mandated! I’m all for minimum wages, as specified in our collective wage agreements. But the legally mandated minimum wage I deem a great economic mistake.