Minimum wage | Minimum wage remains below poverty line

The independent Minimum Wage Commission has approved a higher minimum wage . After lengthy negotiations, the members agreed on a two-stage increase: Starting in January 2026, the lower limit will rise from the current €12.82 to €13.90. Starting in 2027, an additional 70 cents will be added for the approximately six million employees currently receiving the minimum wage. It will then reach €14.60. "With this result, the social partners have found a constructive solution," said Stefan Körzell, board member and chief negotiator for the German Trade Union Confederation (DGB).

The vote was unanimous, according to sources close to the negotiations. Initially, no compromise could be reached, but a mediation proposal by commission chair Christiane Schönefeld calmed the waters. Last time, the business associations prevailed against the unions in the equally represented committee with the chair's vote, which the German Trade Union Confederation (DGB) criticized as an affront and a breach of trust within the equally represented committee. At that time, the minimum wage was increased by only 41 cents despite high inflation rates.

SPD and DGB welcome decision

Federal Labor Minister Bärbel Bas (SPD) welcomed the Commission's current decision in a statement. "This compromise was hard fought," she said. The decision demonstrates that the social partnership is working. "This is the largest wage increase agreed upon by the social partners since the introduction of the minimum wage," Bas said, expressing satisfaction, and announced rapid implementation by regulation.

The decision was influenced by the currently sluggish economic development and the wage index of the Federal Statistical Office. The criterion of 60 percent of the median income for full-time employees (40 hours) was also taken into account in the calculations. The median income is the income at which one half earns more and the other half earns less. According to Körzell, this criterion is met with the current increase, which lays the foundation for a poverty-proof minimum wage.

However, this contradicts calculations by the trade union-affiliated Institute for Macroeconomics and Business Cycle Research (IMK). The economists calculate that, depending on the calculation basis, the minimum wage in Germany would have to be between 14.18 and 15.02 euros for 2026 and between 15.31 and 15.48 euros for 2027. According to OECD figures, a minimum wage of 15.12 euros would be necessary this year to raise it above the poverty line. A request to the German Trade Union Confederation (DGB) on this matter remained unanswered by press time.

Sharp criticism from the left

Sharp criticism of the Commission's decision comes from the left. Ines Schwerdtner, chairwoman of the Left Party, complains: "At €14.60, the minimum wage remains a poverty wage." She calls for a statutory increase to €15. Furthermore, the minimum wage should be automatically adjusted to the 60 percent criterion, as stipulated in a corresponding EU directive . "Anything else means knowingly accepting poverty despite working," says Schwerdtner, pointing out that many low-wage workers have to supplement their salaries with social benefits. Sahra Wagenknecht, head of the Federal Social Welfare Association (BSW), puts it similarly, but without reference to the EU directive.

Due to the introduction and gradual increase of the minimum wage since 2015, the number of supplementary wage recipients has fallen from 1.3 million to around 826,000 in 2024. In addition, the low-wage sector has been significantly reduced, explained Marcel Fratzscher, President of the German Institute for Economic Research (IW), regarding the current decision.

The business associations are counting on the compromise to prevent political intervention, according to sources close to the negotiations. The coalition government had set a target of €15 in its government agreement, a key campaign promise of the SPD. "The fact that the social partners have reached an agreement is an important signal for the preservation of collective bargaining autonomy," said Kim Cheng, Executive Director of the Employers' Association for Food and Beverages (ANG), in an interview with "nd."

East German business associations dissatisfied

Not all business associations share this assessment. Guido Zöllick, President of the German Hotel and Restaurant Association (Dehoga), criticizes the fact that the increase would overtake and partially invalidate eight regional collective bargaining agreements in 2026. "The entire collective wage structure will be affected." Nevertheless, the association welcomes the commission's independent overall assessment. The two-step increase alleviates the burden and improves planning.

A clear negative tone is emerging from East German business associations. "What use are the approved increases to minimum wage earners if the state immediately takes a big slug of money, if services become more expensive and thus unaffordable for some, ultimately jeopardizing their jobs?" warns Jörg Brückner, President of the Saxon Business Association (VSW). Previously, the VSW, together with the associations in Thuringia and Saxony-Anhalt, had warned against any increase in principle. The German Farmers' Association, with the support of some CDU/CSU politicians, even wanted to introduce an exception for seasonal workers .

Labor Minister Bas and the German Trade Union Confederation (DGB) vigorously rejected this proposal. DGB board member Körzell also does not believe the increase will cause economic damage. Quite the opposite: "Over a period of two years, the increases achieved will result in an overall wage increase for minimum wage workers of approximately €5.7 billion," he emphasizes. It can be assumed that this money will flow into consumption and stimulate the economy.