Lawmakers in Germany have approved the plan to increase the minimum wage to 12 euros per hour. The increase should apply from the beginning of October 2022, and there will also be a new higher earnings limit for mini jobs.
Germany increases minimum wage to 12 euros per hour from October
The federal cabinet on Thursday approved a proposal by Federal Labour Minister Hubertus Heil to increase Germany’s minimum wage to 12 euros per hour from October 1, 2022. The move was a cornerstone policy of Chancellor Olaf Scholz’s campaign in the run-up to the federal election last September.
The cabinet also waved through a proposal, pushed for by the FDP in last year’s coalition agreement negotiations, to increase the earnings limit for mini jobs by 70 euros. This means that, from October 1, monthly salaries of up to 520 euros will remain exempt from taxation and contributions to social security. The maximum limit for so-called “midi jobs” will be raised from 1.300 to 1.600 euros.
“More than six million hard-working people will benefit from the increase in the minimum wage, especially in East Germany and above all women,” said Heil. According to the draft law, the increase is expected to cost employers around 5,6 billion euros per year – plus higher social security contributions.
Not everyone happy about minimum wage increase
The statutory minimum wage was first introduced nationwide in Germany in 2015, then at the level of 8,50 euros. It is currently at 9,82 euros, having been increased at the beginning of the year. On July 1, 2022, it is due to rise to 10,45 euros per hour.
While trade unions have welcomed the increase as “an expression of appreciation for the work of many millions of people,” in the words of the German Trade Union Confederation (DGB), employers have criticised it as an attack on collective bargaining autonomy.
This is because minimum wage rates are usually determined by the Minimum Wage Commission – a representative panel of employers, employees and economists – and so the government intervening to impose a one-off adjustment has been taken by some as a violation of the panel’s position. According to the government, the Minimum Wage Commission will continue to decide on future adjustments, with the next decision expected on June 30, 2023.
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