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Comment by justincormack | Hacker News Reader

Keeping real wages low is not the whole story. In fact the are not lower than most of Europe, although they are probably lower than the counterfactual of no euro. But it is productivity, and being in the right markets, and having the right infrastructure of companies in the same types of business that has worked, along with education and many other factors.

Sure not every country can always be a net exporter, but many simply do not have competitive businesses in traded goods and services, and will end up either in debt, or with huge falls in real wages and living standards.

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> But it is productivity, and being in the right markets, and having the right infrastructure of companies in the same types of business that has worked, along with education and many other factors.

It's also about Germany's proximity to former Communist countries in Central and Eastern Europe (both geographically and culturally). It helped put the pressure on German workers which otherwise are heavily unionized ("you have to agree to lower wages, otherwise we'll move everything to Poland or Romania") and it also provides German-based factories with cheap assembly parts which for the most part are produced in said countries.

Just as an anecdote, my older brother was just hired as a truck-driver, and he just came back from a 4-day trip from Germany (we live in Romania) where he delivered some assembled parts for German car factories. He was paid some 300 Euros for the whole trip, and while I'm too lazy to search for how much a German truck driver would have earned for the same job, I'm pretty sure it would be at least 5 times more.

Wages for Truck Drivers in Germany by city:

http://www.gehalt-tipps.de/Gehaltsvergleich/Gehalt/Lkw-Fahre...

It's a bit difficult to compare because there will presumably be things like health insurance and pension plans on top of that, but it sounds more like ~120€/day (assuming 20 work days in a month). So not that much more than the 300€ (though the real cost for the German truck driver is probably much higher with insurances and whatnot).

For many European countries health insurance and pension plans are payed for by taxes, as for Germany specifically I don't know, but I know they have very cheap health care.

I wish - I pay between 400 and 700€/month for healthcare (public insurance). It's my biggest expense after rent.

They fool employees by making the employer pay half of it, though - which of course doesn't make a real difference, but people are less likely to notice.

I think the actual rate is something like 14% of your income, capped at 700 or 800€ (not sure). As I am self-employed, unfortunately by law they are required to assume a minimum income that might be higher than what I actually earn (completely absurd and unfair regulation to discourage self-employment).

Sure, we all pay for it somehow, I pay for all of my health care through my taxes, you pay half through your taxes and half out of pocket if i interpret you correctly? But on general I agree, it is difficult to compare incomes between different countries, for example IT workers in the US compared to in Europe, where the US wages are higher, but the costs of living are also higher (rent, health insurance, etc), so in the end you have to take a lot of things into consideration.

I would argue that €421 for 4 days work in Germany and €300 for 4 days of work in Romania isn't a huge difference, and if there is it is probably to the advantage to the Romanian (cheaper rent, food etc).

For instance, if I had the same wage after taxes that I have now and I lived in Algeria (I use this as an example as I have spent a lot of time in that country), and my standard of living would be unchanged then I would lower my rent by about 60-80% (depending on where in the country), lower my energy costs about 90%, grocery costs would be lowered by about 50-65% and so on.

This pressure exists for decades know and even before the fall of the wall. German companies are active world wide and have production on many continents. German workers always had to compete with workers in lower paid countries. VW for example produces in Brasil, China, Slowakia, Mexico, ... Still VW expanded its manufacturing in Germany. For some years there was a huge trend to go to other countries even in the Mittelstand. About ten years ago many of these companies detected that the German workforce was better educated, the infrastructure was better, production was more flexible and the productivity was higher. But more important they detected that the quality at home was also higher. So the movement than was balanced out. New factories and new production was set up. Since we have a lot of research in this area many of the new factories are top-notch and some are full of factory automation.

Using the information posted by thomasz it doesn't seem plausible that the average German truck driver would make 5 times what your brother made. Assuming that your brother followed European laws and didn't drive more than the allowed hours a day, and assuming an average work week of 5 days* for both your brother and the average German truck driver, the German truck driver would have made €421,80 in 4 days of work.

There are a few possible explanations to your blatantly wrong assertions here. One could be that you are simply as naive to think that a European truck driver would make €1500 for 4 days of work (if that where so I would be leaving my, in relation to the number you provided, low paying work as an IT consultant in a heart beat, €7500/month drool).

Another more cynic explanation would be that you are trying to spread some poor-me-I'm-from-an-ex-communist-country-I'm-so-poor propaganda, hopefully that isn't so. The flip side to that is that the former Eastern block countries are effectively out competing European haulage companies, with the effects most visible in the countries with the highest salaries. For instance, in Sweden, most small family owned transport companies have either filed for bankruptcy or been bought by larger companies, much due to the increasing price dumping caused by Eastern European companies. And increasingly the Swedish haulage companies are hiring Eastern European drivers as contractors, as this is cheaper than hiring Swedish drivers. This, and other similar cases for instance cheap builders, cheap ship yard workers, steel workers and so on, means that many Eastern European countries may be poorer than Western European countries, but the work force have a lot of work opportunities, especially the Eastern Europeans that are in the European Union. Work opportunities that are disappearing in Western Europe.

* That is, about 40h a week give or take according to work schedule in accordance to what the law says about continuous work hours and obligated rest between shifts. For instance it is possible that a truck driver can be scheduled to work 56 hours a week, the regulations are very strict in Europe (http://en.wikipedia.org/wiki/Truck_driver#European_Union)

assuming an average work week of 5 days for both your brother and the average German truck driver, the German truck driver would have made €421,80*

How did you come to that number? Is it from extrapolation on the minimum wage? Because truck drivers don't get the minimum wage, they are compensated very well. This €420 would more likely be something like €1000 for a 5 week trip, or more.

Oh, an important distinction though is if the truck driver just drives the truck in some city (low normal wage), or if he's making cross-country and cross-europe deliveries (much much higher).

I used this link http://www.gehalt-tipps.de/Gehaltsvergleich/Gehalt/Lkw-Fahre... provided by thomasz. Then I took the average from all those reported wages which was €2,109.36/month, divided it by 20 (as this is the average work week for most employees even in the trucking business, and actually well regulated) and multiplied it by 4 as paganel said his brother had worked for 4 days ("he just came back from a 4-day") and earned €300. If the information provided by thomasz is correct or not, well I can't really judge it without more information, but to say that a German truck driver makes 5 times €300 in 4 days is just ridiculous any way you cut it. As a side note, the average truck driver in Sweden makes SEK23,000 that is about €2,600.

http://www.lonestatistik.se/loner.asp/yrke/Lastbilschauffor-...

I agree that paganel's comparison seems a bit exaggerated but note that there are non-wage labor costs here in Germany. Wikipedia reports 22 percent. A common rule of thumb is 30 percent, IIRC.

This means the total wage of the truck driver here would be about €511.30 for 4 days of work.

Most workers don't care about what the employer actually pays, most workers just take into account what is stated on their pay check. Most Swedes, when talking about wage, mention the statement before taxes, so for instance €2000 would equal something like €1400 after taxes. I think this is true for the german numbers as well, they are before taxation, but paganel mentioned that the €300 his brother made for 4 days of work probably wouldn't be taxed, so that is €300 in his pocket, as opposed to the German who would have to pay tax on his €420.

My personal opinion is that talking about wages and comparing them between countries is very difficult, many factors play into the equation; cost of living, food, energy, health care, taxes and so on are big components of this. My point was though, and still is, that claiming that a German truck driver makes €7500 in a 20 day period (which is five times what paganel's brother would have made if he had worked 20 days) is just ridiculous. I claimed earlier that I would quit my, in comparison to €7500, low paying IT job if that was the case, and I think I actually would.

> Another more cynic explanation would be that you are trying to spread some poor-me-I'm-from-an-ex-communist-country-I'm-so-poor propaganda, hopefully that isn't so.

I hope I'm not :) Anyway, maybe I was wrong in my multiplication by a certain factor, but you have to keep in mind that my brother (and his co-workers) only make these kind of trips every 2 weeks or so, so assuming he makes an average of 2 and half such trips per month it's around ~800 euro per month. Which is actually a pretty good salary around these parts, only that most likely most of this money is paid in some manner as to avoid taxes (there was a post from some Hungarian guy a couple of weeks ago explaining why that's the only viable solution for a small to medium company around these parts of Europe).

And regarding the "disappearance" of job opportunities for Western workers... well, something has got to give, you cannot have a free market for goods without a free market for labor. Meaning you cannot have Ikea stores in those "poor" East-European countries with no import charges attached to its merchandise without giving said East-European workers the chance to improve their lives in Ikea's host country' or Nokia's, or BMW's. Otherwise it's just old, plain economic colonialism, and that's bad.

I think €800 for 8 days of work is ok good money for truck driving work and not so far from what truck drivers make for instance in Sweden. And I agree with all of your other points.

Real wages in absolute terms may be higher in Germany than in other parts, but arguably, the more important measure to look at is the relative change since the introduction of the Euro. After all, at the point of changeover, the exchange rates were more or less compatible with the relative competitiveness of the national economies.

When you look at that relative change, a pretty stark picture emerges. See e.g. http://www.nachdenkseiten.de/upload/pdf/110207_HF+FS_Eurolan...

The slides are in German, unfortunately, but the graphs should be fairly clear. The first few concentrate on inflation measures. On slide 5, you see the relative development of nominal labor costs. Note in particular the deviation from the inflation target of the ECB. It is clear that Germany must accept its fair share of the blame.

The irony is that from a social and moral perspective, one could argue that adjusting wages throughout the Eurozone is a good thing. Unfortunately, that has created the current imbalances on the way, and is therefore at least partially to blame for the very high unemployment in the southern Euro nations.

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