Minimum wage in Germany to increase to €14.60 in two phases.
The proposed increase in Germany's minimum wage to €14.60 per hour by 2027 has stirred a significant debate, with arguments both for and against the move. The decision, reached by a commission including both unions and employer representatives, aims to address the issue of many full-time workers still needing state support and reflect a better standard of living for low-income workers.
The minimum wage will increase in two stages: first from the current rate of €12.82 to €13.90 at the beginning of 2026, then by an additional €0.70 in 2027. This will raise the typical minimum wage monthly earnings close to €2,500, making it the second-highest in the EU after Luxembourg.
The Social Democrats campaigned for a higher minimum wage before the federal elections, and the proposal represents a compromise between unions and employers, suggesting broad social partnership support. However, some politicians and observers express disappointment, implying the increments may not be sufficient or that the timing might be problematic.
Employers may be concerned about rising labor costs impacting business competitiveness and employment levels, though these concerns are generally balanced by the commission itself, which includes employer representatives. For instance, the German Farmers' Association warns that the increase could drive fruit, vegetable, and wine cultivation out of Germany, while the German Trade Association criticises the proposed increase for putting numerous jobs at risk in the retail sector.
On the other hand, Marcel Fratzscher, President of the German Institute for Economic Research, sees the proposed increase as a missed opportunity, as he would have liked to see a minimum wage of €15. Fratzscher believes a higher minimum wage would make the labor market more attractive, especially for people from abroad given the acute labor shortage.
The debate highlights the balance between improving worker earnings and managing economic competitiveness. The first argument between the conservative Union party (CDU) and the centre-left SPD, after signing the coalition agreement in April, was over plans for Germany's minimum wage. Stefan Körzell, the negotiator for the German Trade Union Confederation, described the negotiations as "tough."
Despite the controversy, the decision was unanimous, and the compromise reached balances the interests of employees and businesses. The Mindestlohnausschuss (Minimum Wage Commission), which made the decision, warned the federal government against political intervention. As the debate continues, it remains to be seen whether the proposed increase will be implemented and what impact it will have on Germany's economy and workforce.
The proposed minimum wage increase in Germany, despite political arguments over its sufficiency and timing, isexpected to raise monthly earnings close to €2,500, positioning it as the second-highest in the EU after Luxembourg. This move, supported by both unions and employers, aims to improve the standard of living for low-income workers, while also sparking concerns about business competitiveness and job losses in specific sectors. The balance between these factors remains a contentious topic in both finance, politics, and general-news discussions.
