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The Independent
a day ago
- Business
- The Independent
German minimum wage set to rise by about 14% over the next 18 months
Germany's minimum wage is set to rise by about 14% over the next 18 months under an agreement that appears to defuse a potentially divisive issue for the new government. A commission in which employers and labor unions are represented recommended on Friday that the minimum wage rise from its current 12.82 euros ($15) per hour to 13.90 euros at the beginning of 2026 and 14.60 euros a year later. The head of the panel, Christiane Schönefeld, said it faced 'a particular challenge this year in view of the stagnating economy and the uncertain forecasts.' She said it conducted 'very difficult talks, which were complicated further by the expectations expressed in public.' Germany, which has Europe 's biggest economy, has had a national minimum wage since 2015. It was introduced at the insistence of the center-left Social Democrats, who were then — as they are now now — the junior partners in a conservative-led government. It started off at 8.50 euros per hour, but the independent commission reviews its level regularly. There has been one political intervention, however: under then-Chancellor Olaf Scholz, a Social Democrat, the government in 2022 ordered an increase to 12 euros an hour, fulfilling a campaign pledge by Scholz. In their campaign for this year's election, the Social Democrats called for an increase to 15 euros. New Chancellor Friedrich Merz 's conservative bloc strongly opposed another government-ordered raise. Labor Minister Bärbel Bas, a leading Social Democrat, said she would implement the commission's proposal. She said she 'can live well with it.' 'Of course we wanted more for people in this country,' she told reporters. But she praised the panel for reaching consensus on an increase, 'because it looked for a long time as though we wouldn't get an agreement at all, and then of course we would have had to talk in the coalition about how to deal with this.'
Zawya
a day ago
- Business
- Zawya
German commission recommends raising minimum wage to $17.11
Germany is set to gradually raise its hourly minimum wage to 14.60 euros ($17.11) by 2027 from the current 12.82 euros under proposals from a government-appointed commission, less than the ruling coalition had initially agreed to target. Raising the minimum wage can make it harder for companies to take on staff as higher labour costs may force businesses to cut jobs or reduce hours. This risk is especially high for small firms and low-skilled workers, potentially leading to higher unemployment. Initially, the minimum wage is to rise to 13.90 euros at the beginning of 2026. The proposal of the commission, a body comprising employers and trade union representatives, must be implemented by the labour ministry. Germany's Labour Minister Baerbel Bas welcomed the agreement, which "shows that social partnership in this country works," and asked the government to make this adjustment legally binding as of January 1, 2026. Under the changes, the euro zone's largest economy would see full-time workers on minimum wage typically earn close to 2,500 euros a month by 2027. The country would then have the second-highest minimum wage in the European Union behind Luxembourg, which mandates a monthly minimum of 2,638 euros, Eurostat data from 2025 show. Three other EU countries have a national minimum wage above 2,000 euros per month - Belgium, the Netherlands and Ireland. In the coalition deal signed by the conservatives and Social Democrats (SPD) raising the minimum wage to 15 euros an hour in 2026 was framed as something "achievable", and was pushed by the SPD in the talks, but it appears that target will not be reached even by 2027. "In the long term, the minimum wage must provide protection against poverty and keep pace with overall wage developments," said Dagmar Schmidt, deputy chairwoman of the SPD parliamentary group at the Bundestag, welcoming the proposal while recognising that it fell short of what the SPD had hoped for. UNEMPLOYMENT ON THE RISE The commission's proposals come at a challenging moment for Germany after two years of economic contraction, when the weakness is taking its toll with a lag on the labour market and the number of unemployed people approaches the 3 million mark for the first time in a decade. "After years of economic stagnation, which has already left visible marks on the labour market, the time is likely over when minimum wage increases passed the labour market more or less without a trace," said Hagen Lesch, a labour expert at IW, an economic institute that promotes free enterprise, competition and open markets. Companies in Germany are growing more cautious in their personnel planning, the Ifo employment barometer showed on Friday before the minimum wage announcement. "Despite an improved mood in the economy, the labour market has not yet achieved the turnaround," said Klaus Wohlrabe, head of surveys at Ifo. "There is still a lack of orders for new staff to be hired." Jobs data show the number of unemployed people has risen by nearly a third since 2022, especially in helper occupations, which are mostly affected by the minimum wage. "A minimum wage of 14.60 euros threatens to exacerbate this development and could particularly push low-skilled workers out of the labour market," DMB president Marc S. Tenbieg said. ($1 = 0.8535 euros)
Bloomberg
a day ago
- Business
- Bloomberg
German Coalition Risks Conflict Over Contentious Minimum Wage
An independent commission agreed Germany's statutory minimum wage should be increased in two steps to €14.60 ($17.11) in 2027, in a move that could stoke discord in Chancellor Friedrich Merz's ruling coalition. In their blueprint for government, Merz's conservative CDU/CSU bloc and his Social Democrat partners agreed that a minimum wage of €15 an hour was achievable already next year — a key SPD demand.
