Wage Hike in Germany: A Two-Year Climb to €14.60 Minimum Wage
Wage increase set for €14.60 by 2027 announced
Block appearances in Berlin! Germany's minimum wage is on the rise, and it's going to hit €14.60 an hour by 2027. The journey begins next year with a leap to €13.90 an hour. This revelation came from Federal Minister of Labor, Barbara Bas (SPD), following the Minimum Wage Commission's agreement[1][2][3][4].
In the here and now, the minimum wage stands at €12.82 an hour[5]. Over the next 18 months, it's set for an increase of around 14%, making Germany's minimum wage one of the highest in the European Union, trailing only Luxembourg[4].
Criticisms from All Sides
Whilst some social associations argue the increases are still too low, given recent inflation, others from the business sector are concerned about job losses. For instance, the German Retail Federation (HDE) warns of numerous jobs in retail being at risk[6]. Similarly, the farmers' association is concerned about labor-intensive crops potentially being relocated due to these increases[6].
Employers Feel Politically Pressured
Independent commission chair, Christiane Schönefeld, expressed concerns about political influence on the commission[2]. Lead negotiator for employers, Steffen Kampeter, echoed this sentiment, criticizing the significant pressure exerted on the commission by politicians in recent months[2].
The SPD's Minimum Wage Campaign
The SPD, in the midst of its party conference in Berlin, has placed a minimum wage of €15 an hour at the center of its federal election campaign[7]. Amidst these changes, Bas acknowledged, "Of course, we would have liked more for the people in this country, but it's important to me that there is at least an increase in the minimum wage."[2]
The proposed increases aim to help the millions of employees who will benefit[1]. The current definition of someone being at risk of poverty, as per EU standards, is having less than 60 percent of the median income of the total population[8]. According to official statistics, 15.5 percent of the population was at risk of poverty in 2023, amounting to around 13.1 million people in Germany[8].
Employers have warned of severe economic consequences from a significant increase in the minimum wage. Germany could face another recession in 2025[8]. The minimum wage in Germany was initially introduced in 2015 under Chancellor Angela Merkel (CDU)[9].
Other political discussions involve concerns from the general-news sector about potential economic consequences resulting from the significant increase in minimum wage, with employers predicting a possible recession in Germany by 2025. Some finance analysts are also closely monitoring the business impact of these changes, particularly as the minimum wage inches closer to surpassing the rate in Luxembourg, making it one of the highest in the European Union. Additionally, associations within politics, such as the retail and farming sectors, have raised objections, expressing fears about job losses and the potential movement of labor-intensive crops due to the hike.
