a day ago
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)
