Minimum Wage Regimes and Strategies of Labor Market Actors in Austria and Germany

Minimum wage regimes can be arrayed along a spectrum with two poles: statutory minimum wages and systems of minimum wage bargained between employer and employee organizations (social partners). These regimes provide different incentives for actors to define their goals and to elaborate their strategies in order to pursue these goals. However, research on minimum wages is mostly concerned with the effects of minimum wage regimes on income distribution and its success on the containment of the low-wage sector. Against this background, this paper explores strategies of labor market actors in Germany and Austria in response to changes in socio-economic, political and institutional stimuli. Until recently Austria and Germany were both to be placed on the collective bargaining side of the minimum wage spectrum. However, in 2015 Germany implemented a statutory minimum wage. This shift – understood as an expression of resilience – is to be explained. Moreover, the effects of this change on strategies of labor market actors in the system are to be analyzed. We focus on issues like bargaining processes of minimum wage levels, the coverage of and exemptions from minimum wage and differences in monitoring and setting financial penalties against infringements. To meet this end, this paper applies institutional approaches and draws heavily on expert interviews from both countries.