Concerns Regarding Minimum Wage Increase

The employer association Gesamtmetall has issued a warning to the Social Democratic Party (SPD) regarding the proposed increase of the minimum wage to EUR15 per hour. According to Oliver Zander, the association's head, such a politically-mandated increase would represent a staggering 76% rise over the span of a decade, which would outpace the growth of negotiated wage agreements.

Since the introduction of the statutory minimum wage, which rose from EUR8.50 to EUR12.82, collective bargaining agreements have only increased by 29%. Zander cautioned that a EUR15 minimum wage, particularly amid the longest economic downturn since the establishment of the Federal Republic of Germany, could lead to severe economic repercussions, including significant price hikes in everyday services such as hairdressing, baking, and dining.

Furthermore, Zander highlighted the potential for increased business closures, particularly in Eastern Germany, a rise in informal employment, and a reduction in regular job opportunities.

Contrasting Viewpoints from Economic Experts

In contrast, the German Institute for Economic Research (DIW) has suggested that a EUR15 minimum wage could yield positive effects on the national economy. DIW President Marcel Fratzscher argued that a higher minimum wage would foster increased consumer spending and stimulate economic growth.

Fratzscher noted that previous experiences with minimum wage adjustments indicate that substantial increases can lead to a shift in employment towards companies and sectors capable of offering higher wages, thereby enhancing overall economic efficiency and productivity.

Political Reactions and Future Considerations

SPD Secretary General Matthias Miersch pointed out that achieving a EUR15 minimum wage could be legislatively possible if the independent commission, consisting of employer and employee representatives, fails to act accordingly. Conversely, CDU Secretary General Carsten Linnemann opposed the idea of a politically-imposed minimum wage.

Thorsten Frei, the parliamentary group leader of the CDU, emphasized the existing agreement in the coalition contract, which stipulates that the commission should operate independently from political influence. This agreement allows for consideration of collective bargaining trends and the median gross salary of full-time employees as benchmarks for minimum wage adjustments.

According to the coalition agreement, a minimum wage of EUR15 could be attainable by 2026. The minimum wage commission is expected to make its next decision regarding wage adjustments by the end of June 2025. NRW Labor Minister Karl-Josef Laumann has urged the commission to remain robust while also issuing recommendations that reflect inflationary pressures and the living realities of workers, underscoring that previous efforts have not met expectations.

In 2023, tensions arose when the commission's recommendations were not unanimously agreed upon, leading to discontent among employee representatives who felt the proposed increases were insufficient.