New Minimum Wage Set to Rise to at Least EUR13.91

The Federal Statistical Office has released key calculations indicating that the minimum wage in Germany will increase to at least EUR13.91 per hour. This decision comes as the commission of social partners is scheduled to meet in June to discuss wage floor adjustments for the next two years.

According to the recent report, the 2024 tariff income is projected to rise by 4.8%. When combined with the previous year's increase of 3.7%, this results in a total increase of approximately 8.5%. Currently, the minimum wage stands at EUR12.82, so an increase of EUR1.09 brings the new hourly rate to EUR13.91.

Approximately 16% of employees in Germany work within the low-wage sector, which includes all jobs that pay less than two-thirds of the median gross hourly wage. The threshold for low-wage jobs has been calculated at EUR13.79.

The last adjustments approved by the minimum wage commission in June 2023 resulted in a rise from EUR12 to EUR12.41 at the beginning of 2024, followed by another increase to EUR12.82 a year later. The commission, consisting of equal representatives from both employer and labor union sides, is tasked with reviewing wage adjustments every two years.

Since the introduction of the minimum wage in 2015, initially set at EUR8.50, the number of jobs categorized as low-wage has decreased significantly, dropping by 1.3 million to 6.3 million jobs. The commission aims for consensus when determining wage increases, although previous discussions have been contentious, particularly regarding the pace of wage adjustments in response to rising living costs.

In light of rising prices, labor representatives have advocated for more substantial increases than those proposed by employers. A notable disagreement occurred in June 2023, leading to tensions within the commission. As a result, the commission has adopted a new set of rules to ensure future wage adjustments are agreed upon unanimously, emphasizing a collaborative approach moving forward.

The new governance structure will consider the overall tariff development and will align with EU regulations concerning minimum wages, which set a target of EUR15. Currently, Germany's minimum wage ranks behind several EU countries, including Luxembourg and the Netherlands, but is ahead of nations like France and Spain.

Recent OECD data indicates that Germany has not met the EU's wage goals, with current minimum wage levels falling short of the recommended thresholds. Calculations show that to meet the EU benchmark of 60% of the median wage, a minimum wage of around EUR15 would be required.

As discussions continue, the commission is expected to make proposals in June that will likely result in several increases over the next two years, with projections suggesting a minimum of EUR14 by 2026. However, employer representatives have expressed concerns about increasing the minimum wage to EUR15 by 2027, citing economic uncertainties.