The German statutory minimum wage: monitoring, compliance and bureaucratic costs for employers

With the introduction of the general statutory minimum wage in Germany through the Minimum Wage Act (MiLoG), the legislature pursued the goal of protecting dependent employees from inappropriately low wages. A prerequisite for the effectiveness of the law is compliance with the legal requirements by employers. In Germany, the customs authorities are responsible for checking that companies are complying with the statutory minimum wage.

The project examined what additional effort the cooperation, reporting and documentation obligations of §§ 13-17 MiLoG cause for employers. According to the results of a survey of 3,000 employers, the obligation to document working hours results in additional effort in a third of the companies. The effort adds up to 11.2 million hours per year as a result of the Minimum Wage Act. Converted into monetary units using labor cost rates from the Federal Statistical Office, the additional expenses for employers amount to 290 million euros. These minimum wage-related expenses amount to 6% of the total expenditure for working time documentation.

The study also examined how well informed employers are about these obligations, what attitudes they have towards them and whether employers believe that the obligations are being complied with. In a further thematic block, the customs authorities were the focus of the investigation. For this purpose, case studies were carried out at twelve regional customs offices. The results show that the variety of tasks makes the control activity particularly complex and results in a high need for staff that cannot currently be adequately covered.