A higher minimum wage for nursing assistants could result in a shortage of nursing care for 260,000 patients (about 16% of total numbers) by 2020, as cases of insolvency increase and a portion of the private equity is withdrawn from Germany's nursing care market. That has been revealed by a special analysis of the data in the "Pflegeheim Rating Report 2009" ("Nursing Home Rating Report 2009") by RWI, ADMED GmbH and HCB GmbH. The analysis shows that a minimum wage of 9.68 euros for all of Germany, currently under discussion, would have drastic negative impact on providers in eastern Germany and on private homes and mobile service providers.

The introduction of a minimum wage of 9.68 euros for nursing assistants could result in a shortage of some 100,000 nursing home beds and a lack of care for 160,000 mobile care recipients. Consequently, 22% of individuals requiring care in eastern Germany and 7% of patients in western Germany would be left without a nursing home bed. Those are the conclusions reached in a special analysis of the data in the Nursing Home Rating Report 2009 by RWI, ADMED GmbH and HCB GmbH. The minimum wage would raise labor costs for assistant nursing staff, potentially leading to joblessness and a freeze on hiring in this sector. It is additionally expected that the risk of insolvency among nursing homes would increase and that private investors would withdraw in part from the nursing sector. In 2007, 39% of beds were in privately maintained nursing homes, while 45% of all patients receiving care at home benefited from private mobile nursing services.

Providers in eastern Germany as well as private homes and mobile service providers would be particularly hard hit by the introduction of minimum wage levels. This could result in a threat to the prevailing principle of "at-home care over nursing home care". The shortage of nursing care caused by the introduction of the minimum wage could be alleviated by raising prices for nursing services. Were the increased labor costs to be directly translated into price hikes, care recipients, their relatives and social service offices would be faced with additional total costs of 3.3 billion euros between 2010 and 2020. In consequence, relatives of patients would presumably resort more frequently to illegal or semi-legal care services, leading to more widespread illegal employment.

Two different scenarios developed for the study

The study evaluated data provided by the Bundesverband privater Anbieter sozialer Dienste (Federal Association of Private Social Service Providers; bpa) covering 13,000 employees of residential nursing homes and 700 employees of mobile care institutions. Two minimum wage scenarios were developed: a minimum wage of 9.68 euros for all of Germany, as advocated by service sector union Ver.di and the social services association AWO; and differing minimum wage levels of 8.50 euros in western Germany and 7.50 euros in eastern Germany. Since February 2009 the nursing care sector falls under the Arbeitnehmerentsendegesetz (Employee Assignment Act), so that a commission of eight experts has been mandated with preparing a minimum wage level proposal by the end of this year. Private service providers are underrepresented in this body.

Varying minimum wage levels by region would also be expected to lead to a care shortage. Yet, in this case only about 20,000 nursing home beds and services for 50,000 at-home patients would be lacking, little more than one-quarter of the shortfall resulting from a minimum wage of 9.68 euros. Similarly, the scenario with varying wage levels would result in only a minimal increase in the risk of insolvency among private nursing homes.

Varied minimum wage levels also result in nursing staff shortages

Besides the economic consequences, a high minimum wage would narrow the gap in salary levels between professional and assistant nursing staff. Consequently, there would be fewer incentives for employees with low skills levels to acquire additional skills. This lack of incentive would be counterproductive, considering the additional need for about 50,000 professional nurses in institutions and 27,000 in mobile care by 2020.

For these reasons, we strongly recommend against the introduction of a minimum wage. Specifically, the study results indicate that introducing a minimum wage of 9.68 euros throughout Germany would have a dramatic impact on the supply of nursing services. It is expected that somewhat lower minimum wage levels, varying by region, will emerge in the course of negotiations. Setting minimum wage levels at 8.50 euros for western Germany and 7.50 euros for the eastern states would, for example, reflect existing wage differences. Projections suggest that, in this case too, the consequences would also be negative although less drastic. The threat of a significant shortage of nursing services exists in this case as well, since higher wages would drive up costs and eventually result in reduced availability of nursing home beds and mobile care services. By introducing a minimum wage, it will not be possible to equally satisfy the interests of both employees and patients.

For further information, please contact::
Sabine Weiler (Press Office), Phone:+49 201 8149-213, e-mail
Dr. Boris Augurzky, Phone:+49 201 8149-203, e-mail

This press release is based on the project report "Auswirkungen von Mindestlöhnen auf Pflegeeinrichtungen und Pflegebedürftige. It is available (only in German) as a pdf file at www.rwi-essen.de.

RWI, ADMED GmbH and HCB GmbH have jointly issued a number of expert reports on the health sector, including the recent "Krankenhaus Rating Report 2009" ("Hospital Rating Report 2009").