Germany’s minimum wage is set to increase significantly over the next two years, potentially reaching €15 per hour. This move is expected to impact six million workers, according to Federal Minister Hubertus Heil.
Planned increase in minimum wage
Currently, Germany’s statutory minimum wage stands at €12.41 per hour. As of January 1, 2025, it will rise to €12.82 per hour, in line with previously established decisions. Heil, a member of the SPD, has announced that by 2026, the minimum wage could be between €14 and €15 per hour. This increase comes as inflation rates in Germany have recently dropped to 1.9% compared to the previous year.
New EU regulations and challenges
Heil has indicated that the new European Union regulations require member states to set minimum wages at 60% of the median income. He has communicated to the Minimum Wage Commission that meeting this threshold is crucial for compliance. The EU directive must be implemented into national law by November 15. Heil’s letter to Commission Chair Christiane Schönefeld specifies that the 60% threshold should be based on the earnings of full-time employees.
The Minimum Wage Commission, which includes representatives from trade unions and employers, has faced criticism for its recent decisions. The commission previously overruled unions’ recommendations, leading to significant backlash. Chancellor Olaf Scholz has called for future decisions to be made with consensus.
Controversies and future outlook
Steffen Kampeter, head of the BDA (Federal Association of German Employers’ Associations), criticized Heil’s approach, questioning the commission’s independence in light of political influences. On the other hand, Yasmin Fahimi of the DGB (German Trade Union Confederation) praised Heil’s statements as positive signals.
Heil must report to the EU Commission by November on whether German law aligns with the EU directive. He also stressed the need for a proposal from the Minimum Wage Commission on future wage increases starting January 1, 2026.
The FDP (Free Democratic Party) has expressed concerns about Heil’s approach, arguing that it could undermine the autonomy of labor agreements. Lukas Köhler of the FDP warned against undermining established wage frameworks.
New legislation on tariff compliance
In addition to minimum wage changes, Heil has proposed a new Tariff Loyalty Law. This legislation would require companies performing federal contracts to adhere to collective bargaining agreements. Heil explained that tariff agreements generally provide higher wages than the minimum wage, with an average difference of €4.50 per hour.
The new law aims to strengthen union access to workplaces and improve labor conditions. According to the Federal Statistical Office, the rate of collective bargaining coverage in West Germany has fallen from 76% to 51% since 1998, and in East Germany from 63% to 44%.
Heil’s proposed changes are part of a broader effort to enhance worker protections and ensure fair wages in Germany’s evolving labor market.
