Germany's minimum wage is €12 per hour, pre-tax since 1 October 2022. The legislation (german: Gesetz zur Regelung eines allgemeinen Mindestlohns) was introduced on January 1, 2015, by
Angela Merkel's third government, a coalition between the
SPD
The Social Democratic Party of Germany (german: Sozialdemokratische Partei Deutschlands, ; SPD, ) is a centre-left social democratic political party in Germany. It is one of the major parties of contemporary Germany.
Saskia Esken has been the ...
and the
CDU. The implementation of a minimum wage was the SPD's main request during the coalition's negotiations as its central electoral promise during the
2013 federal election campaign. Previously, Germany had
minimum wage
A minimum wage is the lowest remuneration that employers can legally pay their employees—the price floor below which employees may not sell their labor. Most countries had introduced minimum wage legislation by the end of the 20th century. Bec ...
s only in specific sectors, negotiated by trade unions, and some were below the minimum wage level introduced in 2015.
The initial minimum wage was 8.50 euros per hour pre-tax. Since then, Germany's Minimum Wage Commission () regularly proposes adjustments to the minimum wage level. It was last increased to 10.45 euros per hour pre-tax.
Due to inflation, this wage in August 2022 was worth as much as euros were worth in January 2015.
![Cologne Germany Industrial-work-with-Personal-Protective-Equipment-01](https://upload.wikimedia.org/wikipedia/commons/3/38/Cologne_Germany_Industrial-work-with-Personal-Protective-Equipment-01.jpg)
On 3 June 2022, the
Bundestag
The Bundestag (, "Federal Diet") is the German federal parliament. It is the only federal representative body that is directly elected by the German people. It is comparable to the United States House of Representatives or the House of Commons ...
voted 400 to 41, with 200 abstentions, to approve raising the minimum wage in Germany to €12 per hour on 1 October 2022. The October 2022 increase in minimum wage will result in a gross monthly salary of at least €2,080 for a full-time employee, meaning someone working a forty-hour work week.
However, there remain exceptions to the wage minimum for workers on a traineeship, employees during their vocational training, volunteers, internships up to three months, youth and the long-term unemployed.
Minimum Wage Commission
In order to adjust the amount of the minimum wage, the
German government
The Federal Cabinet or Federal Government (german: link=no, Bundeskabinett or ') is the chief executive body of the Federal Republic of Germany. It consists of the Federal Chancellor and cabinet ministers. The fundamentals of the cabinet's or ...
instituted a permanent commission, with nine members: a president, three workers’ representatives, three employers’ representatives and two economists that do not have voting rights within the commission. It assesses Germany's overall economic performance to find a suitable minimum wage level. The first minimum wage adjustment was made in June 2016, and was followed two years later by another adjustment, in June 2018, that raised the minimum wage to €9.19.
Debate around the minimum wage in Germany
The minimum wage was one of the most controversial topics during the 2013 legislative election campaign. The social democratic party SPD, the
German green party
Alliance 90/The Greens (german: Bündnis 90/Die Grünen, ), often simply referred to as the Greens ( ), is a green political party in Germany. It was formed in 1993 as the merger of The Greens (formed in West Germany in 1980) and Alliance 90 (fo ...
and the left-wing party
Die Linke
The Left (german: Die Linke; stylised as and in its logo as ), commonly referred to as the Left Party (german: Die Linkspartei, links=no ), is a democratic socialist political party in Germany. The party was founded in 2007 as the result of th ...
, were in favor of a general minimum wage. By contrast, the economically liberal
FDP, and the socially conservative CDU, remained skeptical.
The economic research institution
CESifo Group
''CESifo Economic Studies'' is a journal on economics published by the CESifo Group. It was established as ''IFO Studien'' in 1955 and obtained its current title in 2002.
The journal is abstracted and indexed by the Social Sciences Citation Index ...
Munich advocated against the introduction of a minimum wage of €8.50. According to a study of the
Center for Economic Studies
The Center for Economic Studies (CES) is an independent institute within the Faculty of Economics of the University of Munich (LMU).
It promotes the international exchange of knowledge and ideas in public finance and other areas of economics. CES ...
of the
Ifo Institute
Ifo is a Local Government Area in Ogun State, Nigeria. Its headquarters are in the town of Ifo at .It has an area of and a population of 698,837 at the 2006 census "Adebami-Tella". The postal code of the area is 112.
Transportation
Ifo is con ...
in 2014, the minimum wage was predicted to cost up to 900,000 jobs, especially in the
eastern part of Germany. However, a study from the
contradicted it by demonstrating that the minimum wage did not actually lead to job losses. Indeed, the Economic Policy Research Discussion Paper, which analyzed employment levels in Germany across different regions from 2011 to 2016, showed that the unemployment rate decreased in regions with previously lower wage levels. Besides, a study of the
German Institute for Economic Research
The German Institute for Economic Research (german: Deutsches Institut für Wirtschaftsforschung), or, more commonly DIWBerlin, is a economic research institute in Germany, involved in basic research and policy advice. It is a non-profit acad ...
showed that the minimum wage increased the hourly wage, but not the total income of people who work in the low-wage sector. Since hourly wages increased slightly, working hours decreased simultaneously to offset higher costs.
The pending October 2022 minimum wage increase to 12 euros per hour, is estimated to increase the pay of over 6 million people according to Labour Minister Hubertus Heil, and should not cost jobs, a prime concern of critics.
Applicability to driving through Germany
The
European Commission
The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body o ...
introduced an
infringement procedure
The European Court of Justice (ECJ, french: Cour de Justice européenne), formally just the Court of Justice, is the supreme court of the European Union in matters of European Union law. As a part of the Court of Justice of the European Unio ...
against Germany on 19 May 2015, arguing that the application of the minimum wage in the transport sector had a disproportionately restrictive impact on the
freedom to provide services and the
free movement of goods, two of the principal freedoms on which the European Union is based. The Commission issued a supplementary letter on this subject to the German authorities on 16 June 2016, initiating two months' notice of potential legal action.
Current and past rates
The below table displays how the German minimum wage level has developed over time. To be precise, it shows the pre-tax (German ) hourly minimum wage. The last column, in 2015 euros, shows that in real terms, the minimum wage level has increased less than in nominal terms. In other words, when Germany raised the minimum wage, the increases were partly eaten up by increases in the cost of living (inflation).
Compliance
A few months after the introduction of the minimum wage on 1 January 2015, around 10% of university students working jobs eligible for minimum wage were still being paid less, illegally.
An estimated 0.5 to 2.4 million workers were illegally paid below the minimum wage in Germany in 2018.
External links
Official English translationof the Minimum Wage Act
References
{{Europe topic, Minimum wage in
Labor in Germany
2015 establishments in Germany
Germany
Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwe ...
Social policy
Third Merkel cabinet