This article presents a summary of the evaluation of a sector-specific minimum wage in the German waste management industry. The minimum-wage first became effective in January 2010 for all employers and employees in the waste management industry. The underlying minimum wage agreement, which had been negotiated between the sector’s collective bargaining parties, set a standard of 8,02 € per hour.
The study summarised in this article consists of two parts: first, a descriptive analysis of the sector’s market conditions and, second, a causal evaluation of the minimum wage’s impact on economic outcomes, such as employment and working conditions. The causal analysis is based on difference-in-differences estimates using two different control groups: First, employers from a control sector that was not subject to a minimum wage and second, employers from the waste management industry itself who were not affected by the introduction of the minimum wage. The data used for the analyses stem from different sources, such as the German Federal Statistical Office, the Mannheim Enterprise Panel collected by ZEW, and finally a firmlevel survey in the waste management and control sector which was conducted primarily for the purpose of the evaluation.
The empirical evidence from the survey data suggests that prior to the introduction of the minimum wage only 23 per cent of employers paid wages below eight euros, and this applied primarily to Eastern German and to private-sector firms. Overall, only 6 per cent of employees received wages below the minimum wage. The differencein- difference estimates indicate that the minimum wage had no significant impact on employment within the first year after its introduction in January 2010. This result is consistent with the notion that imperfect competition in the underlying product market facilitates the pass-through of cost increases to the consumers via price increases. This is because municipal firms have a monopoly over household waste disposal. According to German legislation, the cost recovery principle pertaining to waste disposal fees allows for the direct transmission of higher labour costs in the form of higher fees to households, whose demand for waste removal services tends to remain relatively constant. In terms of working conditions, our results provide some first weak evidence of an increase in marginal employment relationships as well as effective working time.