Germany's Minimum Wage Set to Increase to EUR14.60 by 2027 Amid Criticism

The minimum wage in Germany is poised to rise to EUR14.60 per hour by January 1, 2027, following a two-step increase that will first bring the wage to EUR13.90 starting in early 2026. This decision comes after a unanimous agreement from the Minimum Wage Commission, which includes representatives from both employers and trade unions.

Currently, the minimum wage stands at EUR12.82. The announcement was made by the Federal Minister of Labor, Bärbel Bas, who indicated that the increase aligns with the recommendations of the commission despite her party's initial demand for a EUR15 minimum wage.

Bas stated that a regulatory framework would be presented for approval shortly after the commission's decision. The commission's discussions were described as lengthy and challenging, requiring mediation from its independent chair, Christiane Schönefeld.

Employers have expressed dissatisfaction regarding perceived political pressure during the negotiations. Steffen Kampeter, the employers' representative, criticized the significant influence exerted by political figures, specifically highlighting earlier comments from the SPD party leader, Lars Klingbeil, who had anticipated a EUR15 wage by 2026.

In response to the agreement, Bas acknowledged that while more could have been achieved, the critical aspect is that a minimum wage increase is being implemented. Criticism has emerged from various factions within her party, with the SPD's labor wing urging for a statutory minimum wage of EUR15, which they argue is essential for a dignified standard of living.

Chancellor Friedrich Merz of the CDU remarked that the coalition would not revisit this issue, emphasizing the agreement to implement the commission's recommendations without further political interference.

The Minimum Wage Commission convenes every two years to review and adjust the wage floor, and this latest decision follows a previous adjustment that took place in October 2022, which was made unilaterally by the government.

Social organizations have raised concerns that the new wage remains insufficient, particularly in light of rising inflation. The president of VdK, Verena Bentele, called for a higher wage to better support those living on the minimum salary, who are increasingly struggling with the cost of living.

From the business sector, warnings have also been issued regarding the potential negative impact of the wage increase. The German Retail Association (HDE) has cautioned that businesses may struggle to sustain jobs under the new wage structure, while the Farmers' Association expressed concern that the minimum wage could lead to a decline in domestic agricultural production.

Since its introduction in 2015 under Chancellor Angela Merkel, the minimum wage has been a topic of significant debate in German politics. The previous increase to EUR12 was marked by heightened public discussion about the adequacy of wages relative to living costs.

As of last year, approximately 15.5% of the population in Germany was at risk of poverty, underscoring the ongoing challenges many residents face regarding financial stability.