Reworked Article
Germany's Minimum Wage Set to Jump to €14.60 by 2027
Wage increment in two phases set at €14.60 in new policy.
The current minimum wage in Germany stands at €12.82 per hour. But get ready to feel the pinch, as the Minimum Wage Commission has suggested a two-step increase, bumping it up to €14.60 by 2027. The commission, consisting of top union and employer representatives, has reached this decision despite pressure from political forces.
The first increase will take effect from January 1, 2026, when the minimum wage will rise to €13.90. The compromise passed with unanimous agreement, chaired by Commission Chair Christiane Schönefeld.
According to the Federal Ministry of Labor, this move represents a 13.88% overall increase. The decision has been welcomed by Federal Minister of Labor Barbara Bas, who applauded the hard work of employers and trade unions. She noted that around six million people in the country would benefit from this wage hike.
Grappling with Tough Negotiations
Schönefeld described the agreement as a sustainable balance between employee and business interests. However, she acknowledged the intense negotiations involved, especially considering the public pressure for a minimum wage of €15. Stefan Körzell, lead negotiator for the German Trade Union Confederation, echoed this sentiment, calling the talks "tough." Steffen Kampeter, lead negotiator for employers, criticized the significant political pressure exerted on the commission in recent months.
For weeks, the commission faced a deadlock. An agreement was only reached 50 minutes before the announcement, according to Körzell. If the independent Minimum Wage Commission had not come to a decision, the legislature would have stepped in. During the election campaign, the SPD had demanded a minimum wage of €15.
A Divided Germany
The coalition agreement between CDU, CSU, and Social Democrats did not make a firm commitment. The agreement stated that the Minimum Wage Commission should orient itself based on both the development of collective bargaining agreements and 60% of the gross median wage of full-time employees. This approach allows for a minimum wage of €15 to be achieved by 2026, in line with legal provisions for the commission.
Criticism and Consequences
The German Retail Association sharply criticized the increase in the minimum wage. Alexander von Preen, HDE president, argued that the decision jeopardizes jobs in the private sector. He suggested that the commission should have considered the poor economic situation of the sector and impending job losses more seriously.
Farmers' President Joachim Rukwied warned of serious consequences for many operations. He stated that the increased minimum wage has the potential to displace the cultivation of fruits, vegetables, and wine from Germany, making Germany uncompetitive within the EU, leading to further production shifts abroad.
The Legacy of Merkel
The minimum wage in Germany was introduced in 2015 under Chancellor Angela Merkel. In October 2022, the legislator unusually took the decision out of the commission's hands. At the time, Olaf Scholz, later federal chancellor, had made the minimum wage a central theme of his campaign for "respect" for citizens. However, Friedrich Merz, then a rival candidate, clarified that there was "no legal automatism," and the minimum wage "could be at this level by January 1, 2026 or 2027."
The decisive factors for the wage threshold are the previous development of collective wage agreements in Germany and the median wage. This approach aims to prevent even more people from being at risk of poverty in the future. Last year, around 15.5% of the population was at risk of poverty, amounting to around 13.1 million people in Germany.
Sources: ntv.de, mdi/dpa
- Minimum Wage
- Employees
- SPD
- Black-Red
- Friedrich Merz
- The Minimum Wage Commission, comprising union and employer representatives, decided on a series of increases in Germany's employment policy, with the ultimate goal of raising the minimum wage to €14.60 by 2027, in spite of political pressure.
- Federal Minister of Labor Barbara Bas, expressed approval of the commission's employment policy decisions, stating that around six million employees would benefit from the proposed wage hikes, in line with Germany's business and economy.
