How high should the statutory minimum wage be in the future? The responsible minister has clear ideas – and he has even more plans.
The minimum wage for employees in Germany is set to rise to up to 15 euros over the next two years. Federal Labor Minister Hubertus Heil expects this to be the inevitable consequence of an EU law. “Incidentally, 6 million people will benefit from this,” said the SPD politician on the ARD morning magazine. After months of preparation, he also presented the expected draft law for mandatory collective bargaining for companies on behalf of the federal government.
The statutory minimum wage is currently 12.41 euros gross per hour. On January 1, 2025, the minimum wage will rise to 12.82 euros – according to decisions already made. Heil: “And then in 2026 the minimum wage will be between 14 and 15 euros.” The increase in the minimum wage did not keep pace with inflation. Most recently, however, the inflation rate in Germany fell to 1.9 percent compared to the same month last year.
New EU law
In a letter to the minimum wage commission, which was made available to the German Press Agency, Heil announced that he would consider the new EU requirements to have been met if the committee took into account the requirement of a minimum wage of 60 percent of the average wage. The EU minimum wage directive must be implemented into national law by November 15.
In his letter to the Commission Chair Christiane Schönefeld, Heil explains: “When determining the 60 percent threshold, the wage data of full-time employees must be used as a basis.” He demands: “It is now up to the Minimum Wage Commission to breathe life into these European guidelines.”
Criticism of the Minimum Wage Commission
In the commission, top representatives of trade unions and employers negotiate the increases. They regularly give the government guidelines, which the labor ministry then implements by decree.
In the most recent increase, the employers outvoted the unions with the vote of the independent chairperson. This brought the legally established commission a lot of criticism from the employees. Federal Chancellor Olaf Scholz (SPD) had demanded that the minimum wage commission should again make decisions by consensus in the future.
A taste of tough wrestling
The German Trade Union Confederation (DGB), which is represented on the commission, and the Confederation of German Employers’ Associations (BDA), which is also a member of the body, are already giving a foretaste of how tough the debates behind closed doors are likely to be.
BDA General Manager Steffen Kampeter rants: “The work of the minimum wage commission is called into question by this continued breach of promise by the Federal Minister of Labor.” The employer representative asks: “How independent can a commission be when members of the federal government formulate certain expectations of future results depending on election dates?” DGB head Yasmin Fahimi, on the other hand, praises Heil’s statements as “clear signals.”
Heil must report to EU Commission
Heil says: “The last increase was too low. Everyone knows that. And it is now necessary that we make that clear.” There are 45 million employed people in Germany, 35 million of whom are subject to social insurance contributions.
Regarding the time frame, the minister said: “I have to report to the EU Commission by November whether German law complies with the EU directive.” That is why he has written to the independent minimum wage commission. “In the first half of the year, they have to make a proposal on how things will proceed from January 1, 2026.”
FDP warns Heil
Referring to the collective bargaining autonomy of employers and employees, the FDP sharply criticized Heil. “The Federal Minister of Labor in particular should be careful not to undermine this proven collective bargaining autonomy through obvious election campaign maneuvers and thus shake up a cornerstone of the social market economy,” said FDP parliamentary group vice-chair Lukas Köhler.
Green Party social politician and former Verdi boss Frank Bsirske called for a new German law to link the minimum wage to 60 percent of the average income. Susanne Ferschl, labor market policy expert for the Left Party, also expressed similar views. SPD parliamentary group vice-chair Dagmar Schmidt said her group supported implementing the EU minimum wage directive as quickly as possible. “Germany is not a low-wage country and must not become one.”
More collective bargaining coverage by law
The SPD minister also presented a draft for a collective bargaining law: employees who work on behalf of the federal government should in future generally work under the protection of a collective agreement. “In future, companies should have to grant their employees collectively agreed working conditions when they carry out public contracts and concessions from the federal government,” says a draft law that has been made available to the German Press Agency.
Heil explained on ARD that collective agreements give employees higher wages than the minimum wage. “On average, the hourly wage for collectively agreed wages is 4.50 euros better.” The law also aims to strengthen the unions’ rights of access to companies.
Fahimi said the unions had been waiting a long time for Heil’s “important signals for good work.” According to the Federal Statistical Office, collective bargaining coverage in West Germany has fallen from 76 to 51 percent since 1998, and in the East from 63 to 44 percent.
Source: Stern
