Ifo Institute: A statutory minimum wage could weaken collective bargaining coverage in Germany

In Germany demands for the introduction of a generally binding minimum wage are becoming stronger. This article examines the changes in society and the economy that underlie these demands. It also looks at why some European countries have not introduced statutory minimum wages but prefer to maintain the autonomy of the collective bargaining partners. For the debate about minimum wages in Germany, lessons can be learned from the experience of these countries. The introduction of statutory minimum wages is opposed in these countries because of the fear that this would weaken collective bargaining coverage and could compromise the autonomy of wage bargaining. In addition, the introduction of a generally binding minimum wage would considerably expand the possibilities of applying the Posting of Workers Directive. And possibly lower statutory minimum wages would take the place of higher minimum wages set by collective bargaining.