German authorities are carrying out the first nationwide inspections against businesses circumventing wage rules.
Around 6,000 financial inspectors are participating in the two-day sweep starting on Tuesday targeting businesses that fail to pay the € 8.84 ($10.25) per hour minimum wage, as well as those engaged in illegal employment practices.
The operation is being led by the Federal Customs Service (Zoll), which is part of the Finance Ministry.
The Finance Ministry lost an estimated billion euros in taxes and income due to violations of minimum wage laws in 2017. However, the problem of wage law compliance and illegal employment is believed to be greater than official numbers indicate.
Only 2.4 percent of businesses were inspected in 2017 due to insufficient personnel numbers at the customs service's financial control division (FKS) responsible for monitoring wage violations. In all, the unit conducted around 2,500 investigative proceedings, half of which led to employers being fined.
Finance Minister Olaf Scholz wants to increase personnel at the FKS unit to from 6,800 to 8,500 by 2021.
A study conducted earlier this year by the German Trade Union Confederation found that 2.7 million employees, or about tenth of the workforce, were paid below the minimum wage. Research by the German Institute for Economic Research estimated that between 1.8 and 2.6 million people didn't receive the legal minimum wage in 2017.
Workers in construction, the meat industry, cleaning and hospitality are particularly prone to being paid below the minimum wage.
The German government first introduced a minimum wage in 2015.