Employers Express Concerns Over Proposed EUR15 Minimum Wage

The proposal to raise the minimum wage to EUR15 per hour has triggered significant concern among employers, who warn of potential economic repercussions. The Gesamtmetall employer association has issued a stark warning to the Social Democratic Party (SPD) regarding the implications of this politically mandated wage increase.

Oliver Zander, the association's executive director, highlighted that such a rise would constitute a staggering 76% increase over the past decade. He pointed out that while the legal minimum wage has escalated from EUR8.50 to EUR12.82--over a 50% increase--collective bargaining wages have only risen by 29% in the same timeframe.

Zander expressed fears that implementing a EUR15 minimum wage during what is considered the longest economic downturn since the establishment of the Federal Republic could cause severe economic damage. He predicted that such an increase would lead to considerable price hikes in services, particularly in sectors like hairdressing, bakeries, and hospitality. Furthermore, he cautioned that many businesses, especially in East Germany, could close down, resulting in fewer regular jobs and an uptick in unregistered employment.

In contrast, the German Institute for Economic Research (DIW) holds an opposing view. DIW President Marcel Fratzscher stated that a EUR15 minimum wage could positively impact the overall economy. He argued that a higher wage would stimulate consumer spending and bolster economic growth. The DIW has maintained this stance for some time, asserting that substantial wage increases tend to shift employment towards firms and sectors that can afford to pay higher wages, ultimately enhancing efficiency and productivity.

Matthias Miersch, the SPD's General Secretary, indicated that the party is prepared to legislate a EUR15 minimum wage if the Minimum Wage Commission fails to take appropriate action. Meanwhile, CDU General Secretary Carsten Linnemann opposed the idea of a politically determined wage floor, advocating for adherence to existing agreements made in the coalition contract.

The coalition agreement between the Union and SPD specifies that the commission, comprised mainly of employer and union representatives, must operate independently of political influence. It is tasked with making decisions based on factors such as collective wage development and 60% of the gross median wage for full-time employees. According to this agreement, a EUR15 minimum wage could be feasible by 2026.

The Minimum Wage Commission is expected to reach a decision regarding the adjustment of the minimum wage by the end of June 2025. NRW Labor Minister Karl-Josef Laumann urged the commission to maintain its integrity while providing fair recommendations that reflect inflation and the living conditions of workers. He noted that the commission's previous performance had not met expectations, particularly during a period in 2023 when the commission's recommendations were not unanimously accepted, leading to discontent among worker representatives.