Unlike the US and many other EU countries, Germany has no statutory minimum wage, and debate has reignited over introducing one. One side says it's about social justice; the other calls it a job killer.

To some, it might seem that the jobs held by those uniformed individuals keeping watch at a company entrance are to be envied. They don't seem to involve much stress and leave a good amount of time for magazine reading. But the envy would likely stop when the pay stub arrived.

Security firm jobs might often be low key, but they usually also involve very low pay. In eastern Germany, security personnel can receive hourly wages as low as 3.70 euros ($5.02).

That kind of pay is what Michael Sommer, the head of Germany's DGB trade union federation, referred to when he addressed trade unionists on May 1 and talked about millions of German workers  in the restaurant and hotel industry among others eking out a living on "starvation wages." He demanded that Germany introduce a statutory minimum wage of 7.50 euros ($10) per hour.

[...]

Traditionally, wages in Germany are set according to industry-wide collective bargaining agreements and detailed rules determine what kind of work receives what kind of pay. Because of the strength of trade unions in Germany, wage settlements were generally pretty favorable to workers.

[...]

"That has acted as a kind of virtual minimum wage," said Joachim Ragnatz, an economist at the Halle Institute for Economic Research.

But more and more holes have developed in that system. Welfare benefits have been cut back. Unions have lost clout and some sectors, especially in the service industry, have opted out of collective bargaining agreements.

This is probably the best thumbnail description of this issue that you could ever hope to find.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman