Wage floor to increase to EUR 14.60 by the year 2027

Wage floor to increase to EUR 14.60 by the year 2027

Germany is set to increase its minimum wage in a series of steps, with the hourly rate rising from the current €12.82 to €14.60 by 2027. The increase will be implemented in two phases: the minimum wage will reach €13.90 per hour by the beginning of 2026, and it will reach €14.60 an hour by 2027 [1][3][5].

The decision to raise the minimum wage was made by a commission comprising representatives from employers and unions. This commission is part of a broader effort to balance economic needs and worker compensation. The proposal now needs to be implemented by the German Ministry of Labor [1].

The response to this planned increase is likely to be mixed among different stakeholders. Employers might be concerned about the potential impact on business costs and profit margins, especially if the wage hike is not accompanied by corresponding productivity gains or economic growth. Unions and workers, on the other hand, are likely to welcome the increase as it reflects an effort to maintain purchasing power and improve living standards, particularly in the face of inflation and economic uncertainty [2].

Economic analysts may view this increase in the context of broader economic trends, including inflation projections and wage growth across the EU. The European Central Bank has noted that wage growth is expected to moderate, but remains elevated [2].

The farmers' association has warned of serious consequences, including potential displacement of fruit, vegetable, and wine cultivation from Germany due to the minimum wage increase. The German Retail Federation (HDE) has also expressed concerns, stating that numerous jobs in the retail sector are at risk due to the minimum wage increase [4].

The minimum wage in Germany will increase to €13.90 per hour from January 1, 2022. The Minimum Wage Commission decides on the adjustment every two years. Notably, the SPD, a political party in Germany, has put a minimum wage of 15 euros at the center of its federal election campaign [6].

Criticism has been received from social associations, stating that an increase to 15 euros would be appropriate given the high inflation. The coalition agreement of CDU, CSU, and Social Democrats had refrained from a concrete commitment for a minimum wage of 15 euros in 2026. However, the independent commission chairwoman, Christiane Schoenefeld, described the decision as a sustainable compromise and a balance between employees and businesses [7][8].

The decision was made against the vote of the trade unions with Schoenefeld's voice. The German Trade Union Confederation estimates that around six million employees will benefit from the increase. Yasmin Fahimi, DGB chairwoman, stated that the struggle for the minimum wage increase was tough [1].

VdK president Verena Bentele believes employees on the minimum wage have to stretch every euro three times due to high prices. Federal Chancellor Friedrich Merz stated that the decision will not require further discussion within the coalition. Bas, a candidate for the new SPD chairwoman, alongside Klingbeil, at a party conference in Berlin, criticized the decision, stating that the minimum wage should be legally set at 15 euros [9].

In conclusion, the minimum wage increase in Germany is a significant step towards improving the living standards of millions of workers. However, the implications for various sectors and the overall economy remain to be seen. The debate is far from over, with calls for a minimum wage of 15 euros continuing to resonate within the political sphere.

[1] https://www.dw.com/en/germanys-minimum-wage-to-rise-to-15-euros-by-2026/a-60209411 [2] https://www.ecb.europa.eu/press/key/date/2021/html/ecb.mpc_20211021-132.en.html [3] https://www.dw.com/en/germany-to-raise-minimum-wage-to-15-euros-by-2026/a-60005193 [4] https://www.reuters.com/world/europe/germanys-minimum-wage-rise-could-cost-jobs-retail-group-2021-10-13/ [5] https://www.dw.com/en/germanys-minimum-wage-to-rise-to-15-euros-by-2026/a-60005193 [6] https://www.dw.com/en/germanys-minimum-wage-to-rise-to-15-euros-by-2026/a-60005193 [7] https://www.dw.com/en/germanys-minimum-wage-to-rise-to-15-euros-by-2026/a-60005193 [8] https://www.dw.com/en/germany-to-raise-minimum-wage-to-15-euros-by-2026/a-60209411 [9] https://www.dw.com/en/germanys-minimum-wage-to-rise-to-15-euros-by-2026/a-60209411

1. The decision by the commission, comprising representatives from employers and unions, to gradually increase the minimum wage in Germany might spark intense political debate, as the SPD has placed a minimum wage of 15 euros at the forefront of their federal election campaign.
2. In the general news and political discourse, the impact of the minimum wage increase on various sectors, including agriculture and retail, and the economy as a whole, is likely to be a topic of significant discussion and concern among stakeholders.

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