Minimum wage: Decision pending - Coalition has suggested 15 euros

The statutory minimum wage is currently €12.82. The question of how much employees will have to earn in the future is currently being debated. The Minimum Wage Commission has until the end of June to decide. The committee plans to present its findings to the press on Friday.

Expectations are high, as the decision, which the federal government must later confirm through a legal regulation, has far-reaching consequences. While union representatives are pushing for a significant increase and pointing to the reduced purchasing power of employees, employer representatives are warning of the consequences for companies currently struggling through the third year of recession. Trouble is therefore inevitable – especially since the federal government itself has presented a substantial proposal.

The ink on the coalition agreement had barely dried when the first... Friedrich Merz (CDU) hadn't even been officially appointed Chancellor yet when he emphasized in April that there was no automatic guarantee that the statutory minimum wage would rise to 15 euros next year.

The fact that this figure is even being discussed is due to a passage in the coalition agreement that the CDU/CSU and SPD interpret differently. "For the future development of the minimum wage, the Minimum Wage Commission will, as part of an overall assessment, base its decision on both collective bargaining developments and 60 percent of the gross median wage of full-time employees," it states. "In this way, a minimum wage of €15 is achievable in 2026," the coalition partners continue.

SPD leader Lars Klingbeil said in the spring: “The minimum wage will rise to the 15 euros we want in 2026.” What followed was a weeks-long debate about the appropriate level of the wage floor.

Christiane Schönefeld is the chairwoman of the Minimum Wage Commission.

Source: Michael Kappeler/dpa

However, it remains unclear what recommendation the Minimum Wage Commission will make. The panel, which consists of three union representatives, three employer representatives, two academic consultants, and the commission's chair, Christiane Schönefeld, is independent. According to the Minimum Wage Act, it examines the appropriate level for the wage floor as part of an overall assessment. In doing so, the commission also follows collective bargaining developments – and, as now agreed in the coalition agreement, 60 percent of the gross median wage of full-time employees.

This time, the decision is for the years 2026 and 2027. Unions like Verdi are insisting on the €15 already proposed. The social association VdK supports this.

Given the high inflation of recent years and the recent increase in real wages, VdK President Verena Bentele told the RedaktionsNetzwerk Deutschland (RND) that she considers a recommendation for an immediate increase to €15 appropriate. She argued that increased consumption would strengthen domestic demand. "Every cent more in the minimum wage is spent directly on living expenses, thus stimulating consumption and the economy."

Employers' representatives see things quite differently. Steffen Kampeter, who sits on the minimum wage commission for the German Employers' Association (BDA), recently called the €15 an "economic suicide mission if you link it to the year 2026." The BDA's executive director, for example, warned that an excessively high minimum wage would drive large parts of vegetable production abroad.

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Sandra Warden, managing director of the German Hotel and Restaurant Association (DEHOGA), sees things similarly. "A disproportionate increase in the minimum wage will push up the entire wage structure and jeopardize the stability of the industry," she told RND. It is important that the Minimum Wage Commission "decides on the future minimum wage applicable to all employees based on facts, with economic judgment, and without political influence," Warden demanded.

The German Trade Association (HDE) fears "significant job losses" if the minimum wage increases to €15. Furthermore, the wage-price spiral would be unnecessarily fueled, warned CEO Stefan Genth. He also stated that political influence on the Minimum Wage Commission must stop, and the state must stay out of wage-setting.

In 2022, the minimum wage was legally established by the "traffic light" government, which sparked fierce criticism, particularly from employers. At that time, the minimum wage was raised to €12. Since then, it has increased in two steps. A statutory minimum wage was first introduced in 2015, when it was €8.50.

The current debate surrounding the minimum wage has gained momentum again in recent days after the Farmers' Association suggested paying seasonal agricultural workers less than the minimum wage.

Agriculture Minister Alois Rainer (CSU) was at least open to the idea. "My experts are examining whether there is a legally sound way to make exceptions to the minimum wage possible," he told the RND.