Germany’s Economy Runs on Low Wages
The European giant can rely on an army of poorly paid workers to weather a downturn.
Striking workers are demanding higher wages.
Photographer: Sean Gallup/Getty Images
As the German economy reverts to a slow and steady growth trend after a short-lived boom, it can rely on an unusual resource that helps to protect it from declines: A bigger low-paid workforce than even most economists realize.
Last week, Markus Grabka and Carsten Schroeder of the German Institute for Economic Research in Berlin reported on this phenomenon. They noted that in 2017, when the country reported near-full employment, about 9 million German workers were on low-wage contracts – that is, they earned less than two-thirds of the median hourly wage. That was 24.5 percent of all jobs, significantly more than the 18.9 percent share of low-wage workers reported by the Organization for Economic Cooperation and Development for 2016.