Upcoming Minimum Wage Increase: New Regulations Facilitate Significant Rise
The Minimum Wage Commission in Germany has adopted a new set of rules aimed at fostering cooperation between employers and unions regarding the adjustment of the minimum wage. This development comes as discussions surrounding the appropriate hourly wage to prevent poverty intensify, particularly with the upcoming elections.
Currently, as of January 1, 2025, the legal minimum wage is set at EUR12.82 per hour. The Commission, composed of representatives from both sides, is mandated to review the minimum wage every two years, considering its impact on worker protection, competitive conditions, and overall productivity.
The last decision in June 2023 sparked controversy, as it was made solely by the chair, Christiane Schönefeld, without agreement from the union representatives. The adjustment raised the minimum wage from EUR12 to EUR12.82, a move criticized as insufficient amidst high inflation rates. In response to past conflicts, Commission members have expressed a commitment to reach consensus in future deliberations.
Under the newly established regulations, the voting process will be more structured, aiming to prioritize consensus over unilateral decisions. While it remains possible for the chair to cast a decisive vote, extensive procedural steps will precede this, encouraging collaborative outcomes.
Moreover, the new guidelines indicate that the minimum wage should be informed not only by collective bargaining trends but also benchmarked against 60% of the median gross earnings of full-time employees. Deviations from these criteria can occur only under exceptional economic circumstances.
The German Trade Union Confederation (DGB) has already articulated its demands for the upcoming negotiations, advocating for a minimum wage of approximately EUR15 per hour. The DGB maintains that this figure aligns with the estimated poverty-proof average wage in Germany, calculated to be around EUR14.80.
This criterion of 60% of the median wage is also influencing party positions in the lead-up to the elections, as various political factions argue for an eventual increase of the legal minimum wage to EUR15. The Commission is expected to finalize its recommendations by the end of June 2025, which will take effect in early 2026.
Disagreements have emerged regarding whether to consider the median wage of all employees or restrict the analysis to full-time workers. Including part-time positions would likely lower the median wage and, consequently, the minimum wage. The Commission has decided to focus solely on full-time employees in its calculations.
For the next five years, the Commission's representatives include several key figures from both the employer and employee sides, alongside non-voting economic advisors. This new structure aims to reduce conflicts and enhance the efficacy of wage discussions moving forward.
