The immigration pose a challenge
Employment has continued to grow, mostly in services. So far the minimum wage does
not appear to have had significant negative employment effects overall, and even had a
positive employment impact in sectors and regions with a high incidence of low pay.
Transitions of workers from employment to unemployment appear not to have increased
as a result of the minimum wage (IAB, 2016). The minimum wage appears to have led to a
shift of employment towards standard employment contracts, away from minijobs, which
are taxed at low rates and are not covered by unemployment insurance (BMWi, 2015).
The minimum wage now has been almost fully phased in, with exceptions in some
sectors, mostly in East Germany, in which it will be phased in by end-2017. The government
has introduced an independent minimum wage commission, which includes employers,
trade unions and independent experts, to make recommendations about future
Its objective is to ensure employment outcomes are not harmed. The
effectiveness of the minimum wage commission could also be strengthened by giving the
independent experts voting rights. It is important that future evaluations take into account
the impact of immigration on the supply of labour.