Can we learn from Germany?
whygohome
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http://www.latimes.com/business/la-fi-g ... full.story
Germany has the economic strengths America once boasted
Germany with its manufacturing base and export prowess is the U.S. of yesteryear, an economic power unlike any of its European neighbors. It has thrived on principles America seems to have lost.
By Don Lee, Los Angeles Times
7:33 PM PST, January 21, 2012
Reporting from Elz, Germany
Advertisement
Every summer, Volkmar and Vera Kruger spend three weeks vacationing in the south of France or at a cool getaway in Denmark. For the other three weeks of their annual vacation, they garden or travel a few hours away to root for their favorite team in Germany's biggest soccer stadium.
The couple, in their early 50s, aren't retired or well off. They live in a small Tudor-style house in this middle-class town about 30 miles northwest of Frankfurt. He's a foreman at a glass factory; she works part time for a company that tracks inventories for retailers. Their combined income is a modest $40,000.
Yet the Krugers have a higher standard of living than many Americans who have twice that income.
Their secret: little debt, frugal habits and a government that is intensely focused on high production, low inflation and extensive social services.
That has given them job security and good medical care as well as well-maintained roads, trains and bike paths. Both of their adult children are out on their own, thanks in part to Germany's job-training system and heavy subsidies for university education.
For instance, Volkmar's out-of-pocket costs for stomach surgery and 10 days in a hospital totaled just $13 a day. College tuition for their son runs about $260 a semester.
Germany, with its manufacturing base and export prowess, is the America of yesteryear, an economic power unlike any of its European neighbors. As the world's fourth-largest economy, it has thrived on principles that the United States seems to have gradually lost.
It has tightly managed its budget and adopted reforms — such as raising the retirement age — that some other Eurozone nations are just now being forced to undertake. And few countries can match Germany's capabilities for producing and exporting machinery and other equipment, or its infrastructure for research, apprenticeships and financing that support manufacturing.
"German industry is strong," said Volkmar, speaking in halting English as he occasionally looks up translations on a laptop. "People work good. That's why the German economy is best in Europe."
Indeed, Germany was the only major Eurozone nation to escape the credit downgrades that have hit its neighbors. And the country continues to anchor the continent's economy.
Still, Germany has its share of challenges.
Income inequality, while less pronounced than in the U.S., is rising. Most workers, including the Krugers, have seen little or no real wage gains in recent years. And the nation's population is declining.
And now, with Europe on the ropes, Germany faces both a declining market for its exports and the prospect of having to cough up tens of billions of dollars more to help bail out profligate Eurozone neighbors.
Even so, German business and consumer confidence has held up well. The nation's jobless rate fell last month to a two-decade low of 6.8%, considerably lower than in much of Europe and the U.S.
And though its industrial production is starting to soften, Germany so far has maintained an impressive trade surplus with the rest of the world, including China.
Germany's economy looks like that of the U.S. a generation ago.
In 1975, manufacturing accounted for about 20% of the United States' economic output, or gross domestic product, about the same as in Germany today. Since then, U.S. manufacturing's share of GDP has slid to about 12%.
In 1975, the U.S. budget deficit was a manageable 1% of the economy, about the same as Germany's now. Last year, the U.S. deficit was about 10%.
American families in the 1970s and early '80s typically saved about 10% of their take-home pay, about the same as in Germany today. The U.S. savings rate these days is in the low single digits.
Germany, like China, fiercely promotes its exports and has been reluctant to ramp up domestic spending, frustrating Washington, which wants to sell more American goods abroad.
That may be good for Germany, but many critics say the country's lack of consumption causes unhealthy imbalances for the regional and global economies, much the way America's overconsumption and borrowing does.
But Germany's economic practices and lifestyle are deeply ingrained in a culture that fears debt and inflation. In many ways, for instance, the nation discourages consumerism. Its streets aren't plastered with the billboards that dot the U.S.. Taxes on goods and services are high. Many shops and restaurants in Germany are closed Sundays.
Many smaller stores don't even take credit cards. Volkmar laughed about how consumers in other countries pull out plastic for the smallest of purchases.
"In France you pay for your croissant with your credit card. In Germany, they don't like it," he said, referring to both merchants and consumers.
Since paying off their home loan recently, the Krugers have almost no debt. They sock away money for old age and summer trips, and they rarely eat out.
Household liabilities in Germany have been rising, but remain lower than those in other developed countries. By one common measure, Germany's household debts were 97.5% of total after-tax income in 2010, compared with 125% for the U.S.
Still, the Krugers and other Germans are seeing a rise in freewheeling spending, especially among the young. Volkmar said he gets a lot of credit card offers. More marketing, however, doesn't mean that a lot of consumers are getting credit.
"In truth, it's not easy credit," said Fasun Batmaz, a manager at a TeamBank consumer unit whose name, Easy Credit, belies the rigorous process and strict requirements. "Only a handful come in and may get it."
Easy doesn't describe the Krugers' lives either. On weekdays and every few Saturdays, Volkmar is out the door by 5 a.m., driving 45 minutes to his factory. Vera also works some Saturdays. But neither gets paid more when they work additional hours, nor do they get paid less when they work fewer hours. Over time, the hours balance out.
A similar idea is behind a work-sharing system that many experts said helped Germany avoid the mass layoffs that swept the U.S. during the Great Recession. A company might reduce the hours of all workers to avert laying off an employee.
Germany's lower unemployment rate also reflects its orientation toward formal vocational training.
The Krugers' older child, Thorsten, was interested in books from an early age, and prepared for a university education. Their daughter, Nadine, got a vocational diploma in social work that included three years of schooling after high school, with the final year being on-the-job training at half pay.
About one-fourth of all German businesses take part in this apprenticeship program; six of 10 apprentices end up getting hired permanently, said Dirk Werner of the Cologne Institute for Economic Research.
The practice, he said, is a key reason why Germany has one of the lowest unemployment rates for 15- to 24-year-olds, about 9.7%, according to the Organization for Economic Cooperation and Development in Paris. In the U.S., the comparable rate is about twice that.
Volkmar and others attribute part of the lower unemployment rate to the German work ethic. Yet Germans, on average, work far fewer hours a year than Americans, thanks partly to five or six weeks of vacation.
The amount of the Krugers' vacation time is typical for most Germans.
When they go to France, the Krugers take an old Volkswagen camper, but still expect to spend about $3,000 over three weeks.
Over the recent winter holiday, they took the 45-minute train ride into Frankfurt to buy Christmas presents. They picked up practical gifts: a breakfast tray, cutting board and sleeping gown for Nadine. For Thorsten, the couple bought a tool kit made in Germany.
Volkmar laughed when asked why he bought tools for his son. Thorsten asked for them, he said, adding a bit sheepishly, "The Volkswagen camper needs repair."
<!-- e --><a href="mailto:don.lee@latimes.com">don.lee@latimes.com</a><!-- e -->
Copyright © 2012, Los Angeles Times
Germany has the economic strengths America once boasted
Germany with its manufacturing base and export prowess is the U.S. of yesteryear, an economic power unlike any of its European neighbors. It has thrived on principles America seems to have lost.
By Don Lee, Los Angeles Times
7:33 PM PST, January 21, 2012
Reporting from Elz, Germany
Advertisement
Every summer, Volkmar and Vera Kruger spend three weeks vacationing in the south of France or at a cool getaway in Denmark. For the other three weeks of their annual vacation, they garden or travel a few hours away to root for their favorite team in Germany's biggest soccer stadium.
The couple, in their early 50s, aren't retired or well off. They live in a small Tudor-style house in this middle-class town about 30 miles northwest of Frankfurt. He's a foreman at a glass factory; she works part time for a company that tracks inventories for retailers. Their combined income is a modest $40,000.
Yet the Krugers have a higher standard of living than many Americans who have twice that income.
Their secret: little debt, frugal habits and a government that is intensely focused on high production, low inflation and extensive social services.
That has given them job security and good medical care as well as well-maintained roads, trains and bike paths. Both of their adult children are out on their own, thanks in part to Germany's job-training system and heavy subsidies for university education.
For instance, Volkmar's out-of-pocket costs for stomach surgery and 10 days in a hospital totaled just $13 a day. College tuition for their son runs about $260 a semester.
Germany, with its manufacturing base and export prowess, is the America of yesteryear, an economic power unlike any of its European neighbors. As the world's fourth-largest economy, it has thrived on principles that the United States seems to have gradually lost.
It has tightly managed its budget and adopted reforms — such as raising the retirement age — that some other Eurozone nations are just now being forced to undertake. And few countries can match Germany's capabilities for producing and exporting machinery and other equipment, or its infrastructure for research, apprenticeships and financing that support manufacturing.
"German industry is strong," said Volkmar, speaking in halting English as he occasionally looks up translations on a laptop. "People work good. That's why the German economy is best in Europe."
Indeed, Germany was the only major Eurozone nation to escape the credit downgrades that have hit its neighbors. And the country continues to anchor the continent's economy.
Still, Germany has its share of challenges.
Income inequality, while less pronounced than in the U.S., is rising. Most workers, including the Krugers, have seen little or no real wage gains in recent years. And the nation's population is declining.
And now, with Europe on the ropes, Germany faces both a declining market for its exports and the prospect of having to cough up tens of billions of dollars more to help bail out profligate Eurozone neighbors.
Even so, German business and consumer confidence has held up well. The nation's jobless rate fell last month to a two-decade low of 6.8%, considerably lower than in much of Europe and the U.S.
And though its industrial production is starting to soften, Germany so far has maintained an impressive trade surplus with the rest of the world, including China.
Germany's economy looks like that of the U.S. a generation ago.
In 1975, manufacturing accounted for about 20% of the United States' economic output, or gross domestic product, about the same as in Germany today. Since then, U.S. manufacturing's share of GDP has slid to about 12%.
In 1975, the U.S. budget deficit was a manageable 1% of the economy, about the same as Germany's now. Last year, the U.S. deficit was about 10%.
American families in the 1970s and early '80s typically saved about 10% of their take-home pay, about the same as in Germany today. The U.S. savings rate these days is in the low single digits.
Germany, like China, fiercely promotes its exports and has been reluctant to ramp up domestic spending, frustrating Washington, which wants to sell more American goods abroad.
That may be good for Germany, but many critics say the country's lack of consumption causes unhealthy imbalances for the regional and global economies, much the way America's overconsumption and borrowing does.
But Germany's economic practices and lifestyle are deeply ingrained in a culture that fears debt and inflation. In many ways, for instance, the nation discourages consumerism. Its streets aren't plastered with the billboards that dot the U.S.. Taxes on goods and services are high. Many shops and restaurants in Germany are closed Sundays.
Many smaller stores don't even take credit cards. Volkmar laughed about how consumers in other countries pull out plastic for the smallest of purchases.
"In France you pay for your croissant with your credit card. In Germany, they don't like it," he said, referring to both merchants and consumers.
Since paying off their home loan recently, the Krugers have almost no debt. They sock away money for old age and summer trips, and they rarely eat out.
Household liabilities in Germany have been rising, but remain lower than those in other developed countries. By one common measure, Germany's household debts were 97.5% of total after-tax income in 2010, compared with 125% for the U.S.
Still, the Krugers and other Germans are seeing a rise in freewheeling spending, especially among the young. Volkmar said he gets a lot of credit card offers. More marketing, however, doesn't mean that a lot of consumers are getting credit.
"In truth, it's not easy credit," said Fasun Batmaz, a manager at a TeamBank consumer unit whose name, Easy Credit, belies the rigorous process and strict requirements. "Only a handful come in and may get it."
Easy doesn't describe the Krugers' lives either. On weekdays and every few Saturdays, Volkmar is out the door by 5 a.m., driving 45 minutes to his factory. Vera also works some Saturdays. But neither gets paid more when they work additional hours, nor do they get paid less when they work fewer hours. Over time, the hours balance out.
A similar idea is behind a work-sharing system that many experts said helped Germany avoid the mass layoffs that swept the U.S. during the Great Recession. A company might reduce the hours of all workers to avert laying off an employee.
Germany's lower unemployment rate also reflects its orientation toward formal vocational training.
The Krugers' older child, Thorsten, was interested in books from an early age, and prepared for a university education. Their daughter, Nadine, got a vocational diploma in social work that included three years of schooling after high school, with the final year being on-the-job training at half pay.
About one-fourth of all German businesses take part in this apprenticeship program; six of 10 apprentices end up getting hired permanently, said Dirk Werner of the Cologne Institute for Economic Research.
The practice, he said, is a key reason why Germany has one of the lowest unemployment rates for 15- to 24-year-olds, about 9.7%, according to the Organization for Economic Cooperation and Development in Paris. In the U.S., the comparable rate is about twice that.
Volkmar and others attribute part of the lower unemployment rate to the German work ethic. Yet Germans, on average, work far fewer hours a year than Americans, thanks partly to five or six weeks of vacation.
The amount of the Krugers' vacation time is typical for most Germans.
When they go to France, the Krugers take an old Volkswagen camper, but still expect to spend about $3,000 over three weeks.
Over the recent winter holiday, they took the 45-minute train ride into Frankfurt to buy Christmas presents. They picked up practical gifts: a breakfast tray, cutting board and sleeping gown for Nadine. For Thorsten, the couple bought a tool kit made in Germany.
Volkmar laughed when asked why he bought tools for his son. Thorsten asked for them, he said, adding a bit sheepishly, "The Volkswagen camper needs repair."
<!-- e --><a href="mailto:don.lee@latimes.com">don.lee@latimes.com</a><!-- e -->
Copyright © 2012, Los Angeles Times
Post edited by Unknown User on
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Comments
Freedom!! God Bless America! You'll never get my guns! Higher taxes for the rich will slow prosperity, no one will want to succeed.
With nearly half of America focused on that kind of crap, I don't see anything changing soon.
that's a sign of weakness......
"Well, you tell him that I don't talk to suckas."
It is terrifying when you are too stupid to know who is dumb
- Joe Rogan
"Well, you tell him that I don't talk to suckas."
There are enough American soldiers and bases in Germany to provide them protection. Thanks America.
"Hear me, my chiefs!
I am tired; my heart is
sick and sad. From where
the sun stands I will fight
no more forever."
Chief Joseph - Nez Perce
I don't know if there are any restrictions. You factor in the cold war split and that is going to hinder the development of a large army. Per Wiki, they have over 73,000 active military personal.
Although some might go away due to budget cuts unless we start paying our fair share for them to stay.
the military is not around to police the world ... the military is around so there can be money spent on military equipment ... the so called policing is simply part of a foreign policy that serves corporations and the military industrial complex ...
That's because they know we're here.
Oh ya, n they tried to conquer the world and murder every Jew in it... eh- 70 years ago... Military's been a little light ever since.
http://en.wikipedia.org/wiki/Vauban,_Freiburg
Godfather.
big difference is germany is a "we" culture ... they, for the most part, believe in the "greater good" ... much easier to be relatively successful when people subscribe to the collective ...
i've traveled there and my aunt has been living there for almost 2 decades ...
in what ways are they spreading the wealth around? I don't really know that much about their politics. I see they have a progressive tax structure but have a corporate flat flat tax of 15% as compared to our loophole laden nonsensical 35%. I know they have a system of nationalized healthcare, and they have an affordable higher learning and vocational education structure.
even just in the article, it talks about the income inequality gap increasing (something that doesn't always mean a negative but is usually reported as such)...
lol...I love that the article points out that the things that Germany is doing now is something we did 70 years ago and have lost over time...fantastic...
they were smart though, they made universal health care a right...we decided to make medicaid and medicare insurance programs instead in the 60's and it is still costing us today...that is a huge difference in policy
ups and downs for every country...while Germany comes to grips with the debt crisis in Europe, hopefully they are able to make the decisions that keep them afloat...
It is terrifying when you are too stupid to know who is dumb
- Joe Rogan
Germany is the Mr. Blond of Reservoir Dogs ... they were crazy earlier, but seem cool now. I just don't know if we are past the cop / ear scene yet. :?
But as I said earlier, Germany needs to quit making so much cool shit if they want to help us.
I agree it's not exactly spreading the wealth around. But these noecons that like to think that somehow Obama's plan for America is to "spread the wealth around" don't realize that liberals are basically striving to push for something like the German or Canadian models. A nice hybrid between socialism and capitalism.
These neocons have been eating up all the right wing propaganda. But really all progressives want is to have better infrastructure, social programs, education, and healthcare for ALL.
Most could really care less if you tax the rich at a higher level. But if the rich are going to continue to spend trillions invading countries for no real reason other than to thicken their wallets, then maybe they ought to be paying for it.
Liberals don't really want higher taxes. No one does.
My girlfriend is German, and that is why I read about and follow what is going on there---in addition to simply following world events. Her family is still in Germany and we visit every year.
They enjoy the comfort of knowing that their healthcare is paid for by society; it is a reassurance that they will not have to deal with insurance companies who may or may not cover treatments. It is one less thing for them to worry about.
They like that their towns are clean and progressive--see the Frieburg link provided by "Sweetchildofmine". They like that their airports, train system, and infrastructure is sound and well-maintained. They like the progressive attitude toward clean energy, although fossil fuels will still play a role in energy production for the next 2 decades while the transition is made.
WWII and Hitler are embarrassments; it's not talked about. But, they are proud of where they're country is today. They are proud that other nations look to Germany as a symbol of strong manufacturing and a sound economy.
Like any country, there are things that the can complain about (obesity is an issue, but falling), and they do, but overall they are happy. In general, there is a sense of fairness and community. It's a beautiful place, with many "green" and walkable cities. It is possible that my girlfriend and I---through a fellowship or a job--might move there soon. I would love the opportunity to do so.
I would say the biggest problem, other than the Neo-Cons, is the language used by the president...fair share...actually said spread the wealth around...tax the rich, tax the rich, tax the rich...it is a polarizing issue. I do believe that most progressives want higher taxes on the rich...and there in lies the flaw. it is looking at the wrong end of the horse. Spending is the issue.
Easy solution...let the states handle it...those that want to go to states that offer free healthcare are welcome...those who want to go to states that are run by private insurance companies are welcome...trying to force a Gigantic country like ours with 300+ million to all agree on anything is silly. Increased responsibility on the states would benefit politics greatly in this country.
It is terrifying when you are too stupid to know who is dumb
- Joe Rogan
STRALSUND, Germany (Reuters) - Anja has been scrubbing floors and washing dishes for two euros an hour over the past six years. She is bewildered when she sees newspapers hailing Germany's "job miracle."
"My company exploited me," says the 50-year-old, sitting in the kitchen of her small flat in the eastern German town of Stralsund. "If I could find something else, I'd be long gone."
Stralsund is an attractive seaside town but Anja, who preferred not to use her full name for fear of being fired, cannot afford the quaint cafes.
Wage restraint and labor market reforms have pushed the jobless rate down to a 20-year low, and the German model is often cited as an example for European nations seeking to cut unemployment and become more competitive.
But critics say the reforms that helped create jobs also broadened and entrenched the low-paid and temporary work sector, boosting wage inequality.
Labor office data show the low wage sector grew three times as fast as other employment in the five years to 2010, explaining why the "job miracle" has not prompted Germans to spend much more than they have in the past.
Pay in Germany, which has no nationwide minimum wage, can go well below one euro an hour, especially in the former communist east German states.
"I've had some people earning as little as 55 cents per hour," said Peter Huefken, the head of Stralsund's job agency, the first of its kind to sue employers for paying too little. He is encouraging other agencies to follow suit.
Data from the European Statistics Office suggests people in work in Germany are slightly less prone to poverty than their peers in the euro zone, but the risk has risen: 7.2 percent of workers were earning so little they were likely to experience poverty in 2010, versus 4.8 percent in 2005.
It is still lower than the euro zone average of 8.2 percent. But the number of so-called "working poor" has grown faster in Germany than in the currency bloc as a whole.
In response, as other European countries rush to deregulate, Germany is re-regulating.
Angela Merkel's conservative government is trying to water down the effects of some labor reforms brought in by her Social Democrat (SPD) predecessor Gerhard Schroeder, a year-and-a-half before the next federal election, when she is expected to seek a third term.
PRECOCIOUS REFORMER
The contrast between Germany's record levels of employment and the dire jobs situation elsewhere in Europe is stark.
Last year, the number of people in employment in Germany rose above the 41 million mark for the first time. The jobless rate has been falling steadily since 2005 and now stands at just 6.7 percent, compared to 23 percent in Spain and 18 percent in Greece.
It has been a tough battle since German unemployment peaked after reunification in 1990. Many east German businesses floundered in a free market once the Berlin Wall fell, sending joblessness there soaring over 20 percent.
Globalization put Germany's export-reliant economy under competitive pressure, forcing it to adjust quickly.
By 2003, Germany was embarking on reforms hailed as the biggest change to the social welfare system since World War Two, even as many of its peers were moving in the opposite direction.
While the French Socialists were introducing the 35-hour week and cranking up minimum wages, Germany's Social Democrats (SPD) were deregulating the labor market and raising pressure on the jobless to find work.
Unions and employers agreed wage restraint in return for job security and growth. Flexible working practices and government-subsidized reduced working hours enabled employers to adjust to the economic cycle without hiring and firing.
From 2005, joblessness started to fall and is nearing pre-reunification levels. Elsewhere in Europe, governments tackling high unemployment are playing catch-up, making labor reforms the number one priority.
France's conservative President Nicolas Sarkozy has repeatedly cited Schroeder's "Agenda 2010" reforms as an example for his country over the past few months. Labor reforms being introduced in Spain and Portugal have also borrowed heavily from Germany.
"BEST LOW WAGE SECTOR IN EUROPE"
Job growth in Germany has been especially strong for low wage and temporary agency employment because of deregulation and the promotion of flexible, low-income, state-subsidised so-called "mini-jobs."
The number of full-time workers on low wages - sometimes defined as less than two thirds of middle income - rose by 13.5 percent to 4.3 million between 2005 and 2010, three times faster than other employment, according to the Labour Office.
Jobs at temporary work agencies reached a record high in 2011 of 910,000 -- triple the number from 2002 when Berlin started deregulating the temp sector.
Economists say it was Schroeder's intention to bring about a rapid expansion of these sectors in order to get the poorly-qualified and long-term unemployed back into the workforce.
In 2005, Schroeder's last year as chancellor, he boasted at the World Economic Forum in Davos: "We have built up one of the best low wage sectors in Europe."
Seven years later, employers praise the reforms that led to the growth of mini-jobs and temping.
"The unions' argument that (mini) jobs lead to working conditions becoming precarious in Germany is not valid," said Mario Ohoven, head of the main association of "Mittelstand" small and medium-sized firms.
Ohoven said they were particularly popular with women and students trying to earn some extra cash, while Juergen Wuttke of the BDA employers' group said the reforms gave companies more flexibility and the ability to hire more people for low-skilled jobs with low productivity.
Fritz Engelhardt, who runs a small three-star hotel in the south-western town of Pfullingen, says he employs two "mini-jobbers" to help out at the weekend and run small errands.
"Many people in catering try to deal with peaks in work at the weekend or when they have special events by hiring mini-jobbers," Engelhardt said. "With big chains, hotels can use workers from a sister company, but for small and medium-sized companies mini-jobs are crucial to their very existence."
Even German corporate giants rely on these new forms of employment for greater flexibility. Adidas, the world's second largest maker of sports apparel, and supermarket chain Kaufland, part of the same group as discount chain Lidl, both use mini-jobs to fill in staffing gaps when business picks up.
Data from the Organisation for Economic Co-operation and Development shows low-wage employment accounts for 20 percent of full-time jobs in Germany compared to 8.0 percent in Italy and 13.5 percent in Greece.
ROAD TO NOWHERE
Critics say Germany's reforms came at a high price as they firmly entrenched the low-wage sector and depressed wages, leading to a two-tier labor market.
New categories of low-income, government-subsidized jobs - a concept being considered in Spain - have proven especially problematic. Some economists say they have backfired.
They were created to help those with bad job prospects eventually become reintegrated into the regular labor market, but surveys show that for most people, they lead nowhere.
Employers have little incentive to create regular full-time jobs if they know they can hire workers on flexible contracts.
One out of five jobs is a now a "mini-job," earning workers a maximum 400 euros a month tax-free. For nearly 5 million, this is their main job, requiring steep publicly-funded top-ups.
"Regular full-time jobs are being split up into mini-jobs," said Holger Bonin of the Mannheim-based ZEW think tank.
And there is little to stop employers paying "mini-jobbers" low hourly wages given they know the government will top them up and there is no legal minimum wage.
Trade unions and employers in Germany traditionally opt for collective wage agreements, arguing that a legal minimum wage could kill jobs, but these agreements only cover slightly more than half the population and can be circumvented.
"A lot of my friends work as carpenters, but companies describe them as janitors in their contracts to avoid paying the salary negotiated in the collective wage agreement," said one 33-year-old unemployed man in Stralsund who declined to give his name.
The deregulation of temporary agency work has also given employers less incentive to hire workers on staff contracts with job protection and decent pay. Temporary workers are often paid less than staff in Germany.
Low wages for mini-jobbers and increased pressure on the unemployed to get a job have had a deflationary impact on salaries across the board, some economists say.
RE-REGULATING
While wage inequality used to be as low in Germany as in the Nordic countries, it has risen sharply over the past decade.
Low wage workers earn less relative to the median in Germany than in all other OECD states except South Korea and the United States.
"The poor have clearly lost out to the middle class, more so in Germany than in other countries," said OECD economist Isabell Koske.
Depressed wages and job insecurity have also kept a lid on domestic demand, the Achilles heel of the export-dependent German economy, much to the exasperation of its neighbors.
"Import demand is low, even though Germany is one of the top performers in the euro area and could contribute more to a stronger performance of its partner countries," said Ekkehard Ernst of the International Labour Organization (ILO).
With the 2013 elections looming and European neighbors complaining of trade imbalances, Germany's leaders have brought the issue of low wages back onto the agenda.
Chancellor Merkel plans to introduce a minimum wage for the sectors which do not already have one and Labour Minister Ursula von der Leyen is campaigning for temp workers to get paid as much as staff.
"The fact that we have a conservative government that is discussing the establishment of a minimum wage - that says something," said Enzo Weber of Germany's Institute for Employment Research (IAB).
"Whatever government comes next, measures to make the workforce more flexible will not pick up at the same pace. We've reached a critical mass and I think it won't go much further."
ILO's Ernst says Germany can only hope that other European countries do not emulate its own wage deflationary policies too closely, as demand will dry up: "If everyone is doing same thing, there won't be anyone left to export to."
(Additional Reporting by Brian Rohan and Victoria Bryan; Editing by Stephen Brown, Annika Breidthardt, John Stonestreet and Noah Barkin/Janet McBride)
Joe Egan and Gerry Rafferty were a duo known as Steee-lerrss Whee-eell when they recorded this Dylan-esque pop-bubble-gum favorite from April of 1974, that reached up to number 5, as K-Billy's Super Sounds of the 70's continues..."
If I opened it now would you not understand?