Where the minimum wage is not enough for a pension above basic security

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The current minimum wage in the ten largest German cities is not enough for a pension above the minimum level of social security. This emerges from a response from the federal government to a request from the left-wing MP Pascal Meiser star available exclusively.

According to the Federal Ministry of Labor, employees would have to earn between 12.72 and 16.14 euros gross per hour in order to receive a pension from their wages and without additional social benefits that corresponds to the level of basic security in old age in these cities. The minimum wage is currently 12 euros.

The different numbers are explained by the fact that the amount of basic security in old age also depends on where you live. Social benefits are received by those of retirement age whose income is not sufficient to cover their own living expenses. In addition to the standard rate of 502 euros, recipients also receive money for accommodation, among other things. The following applies: the more expensive the place of residence, the higher the housing costs will be covered. The office pays costs that are “appropriate” – for example, taking into account the rent index in a region.

This is why the calculated gross requirement for basic security in old age differs significantly in some cases: in Leipzig, single recipients were entitled to an average of 918 euros at the end of June this year, in Hamburg it was 1,115 euros, in Stuttgart and Frankfurt am Main 1,135 euros, in Munich even 1,165 euros, according to the ministry’s figures.

There has been a surcharge on low pensions since 2021

What the left-wing MP Meiser wanted to know with his question: What would a person who has worked full-time for 45 years have to earn in these cities in order to later reach these values ​​with their net pension? In Munich, for example, according to the calculations, that would be 16.14 euros gross – an hourly wage that is well above the current minimum wage of 12 euros.

However, there is additional support for people with low pensions. Since 2021, the pension insurance has automatically paid out a supplement to the pension, the basic pension, to those who have worked long hours and earned below average wages. If these are taken into account, the minimum wage is, according to the calculations, sufficient to achieve the basic security level in Berlin, Düsseldorf, Leipzig, Dortmund and Essen – but not in Stuttgart, Frankfurt am Main, Cologne, Munich and Hamburg. Affected people can also apply for social benefits such as housing benefit, i.e. a rent subsidy, and are then likely to be above the thresholds mentioned.

These figures are likely to add further momentum to the ongoing debate as to whether low-wage work is still worthwhile. The fact that citizens’ benefits will rise by twelve percent on January 1, 2024 due to higher consumer prices has reignited the discussion about whether the gap between wages in the lower income range and social benefits is large enough. Opposition leader Friedrich Merz (CDU), for example, criticized the fact that it is often no longer worthwhile for minimum and low wage earners to work because the social benefits are so high.

However, the minimum wage will also be increased: on January 1, 2024 it will rise to 12.41 euros, and a year later to 12.82 euros. However, this proposal from the Minimum Wage Commission, which the employers in the committee pushed through against the employees, was widely criticized as being too low.

Ricarda Lang: “This is a requirement of fairness”

For Pascal Meiser, who made the request, the figures show “that the minimum wage is currently far from protecting against poverty in old age, especially in large cities.” The left-wing MP said that wage levels must therefore urgently rise across the board star.

The co-chair of the Green Party, Ricarda Lang, is also calling for a higher minimum wage – in view of this latest response from the federal government. “In our country everyone should be able to live on their wages, that is a requirement of fairness and appreciation,” she told the star. “To achieve this, the minimum wage must continue to rise – especially in view of the increased cost of living and rents. In this way, we are also strengthening the wage gap requirement.”

For the labor market policy spokesman for the FDP parliamentary group, however, it is primarily about getting people into better-paid work in the future. “The aim of our welfare state should be that minimum wage jobs only have to be carried out temporarily, because promotion to better paid jobs should be possible for everyone,” said Pascal Kober star. Politics and the welfare state must increasingly focus on this promise of advancement.

According to the FDP MP, it is also about a “more ambitious housing policy” in metropolitan areas, “because the lack of living space leads to rising housing prices and makes the cost of living excessively expensive.”