Minimum wage to rise in 2019

The 2014 introduction of the minimum wage, initially set at €8.50, was heralded as an example of the ability of Germany’s ruling coalition to cooperate effectively.

Although it was initially opposed by some chambers of commerce as being potentially damaging to the country’s strong economy, four years later there have been few negative impacts. 

Fears that the increase would lead to job losses, particularly in the former East, were largely unfounded.

"Below the poverty line"

Unions, while initially welcoming the wage law, argue that the current minimum is too low to live off for many across the country.

Verdi Union CEO Frank Bsirske told DPA: “In 2020 the minimum wage should be raised again, because it is simply too low to live off."

Reiner Hoffmann of the German Trade Union Confederation told DPA that he was aiming for a wage increase to €12.

“The minimum wage must rise in the medium term and be poverty proof”, Hoffmann said. "There is a mechanism in the act to allow for the wage to rise to €12 via a one-time adjustment."

Hoffmann also called for further changes to the legislation to strengthen collective bargaining obligations.

Finance Minister Olaf Scholz has supported the idea, calling for the minimum wage to be raised to €12 as a way of accounting for the cost of living across the country.

"No need to change the current system"

Employers however are resistant to the suggestions.

Ingo Kramer, President of the Confederation of German Employers, warned that any further increases outside the scope of those forecasted could have negative economic impacts.

“The Minimum Wage Commission was established with a clear mandate,” Kramer said.

“This was a joint political decision of the SPD, CDU and CSU… And now the honourable Hanseatics want to cause further costs for reason of party and election tactics, which they themselves do not have to bear and which are far from any economic viability,” he said.

“The SPD cannot go against a mechanism which they themselves installed and tell us to start all over again.”

The increase was recommended in October by the independent Minimum Wage Commission, which is tasked with adjusting the level every two years. 

The Commission seeks to balance a number of interests, including adequate protection of employees, establishing fair competitive conditions and not jeopardising the overall employment rate.

Once the Commission makes a recommendation, it is up to the federal government to put the change into law and make it legally binding on employers. 

 

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