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15 Euro Minimum Wage Debate: Business Leaders Call it a "Foolhardy Venture"
The German Social Democratic Party (SPD) is pushing for a hike in the minimum wage to 15 euros by 2026, but employers are far from on board. Steffen Kampeter, CEO of the Federal Association of German Employers' Associations (BDA), labels this move as "wage populism" without a shred of rational justification. He asserts it's a recipe for economic self-destruction.
Employers within the Minimum Wage Commission are rallying against the proposed increase. Kampeter goes so far as to call the figure of 15 euros an economically suicidal mission if we factor in the year 2026. He acknowledges that future years will likely witness additional minimum wage increases, surpassing boundaries that appear distant today, but 15 euros by 2026 is unfeasible, at least in the short term. The current minimum wage is 12.82 euros per hour, which rose from the previous 9.82 euros in 2015.
Employer's Concerns over Service Industries
Apart from merchant services, Kampeter warns that a jarringly high minimum wage negatively affects wage-intensive industries. For example, an overreach in the minimum wage is causing wide swaths of vegetable production to migrate overseas, leading to a loss of self-sufficiency in crucial staple foods. Moreover, the minimum wage is gradually edging towards a level that pushes the entire wage structure upwards. This wage inflation is causing ripples in industries, ultimately driving up costs for services.
Kampeter's Reaction to Labor Minister's Demands
Kampeter is a member of the independent commission of employer and trade union representatives who will decide on the increase of the minimum wage for 2026 and 2027 by the end of June. He was quick to respond to recent demands by Labor Minister Barbara Bas for an increase to 15 euros per hour with a sharp rebuke: "The commission operates independently - any threats from the cabinet are unbecoming of a federal government," Kampeter declared, expecting utmost respect from the new Labor Minister and no unwarranted interference in the minimum wage commission's affairs.
Bas had called on the commission to boost the minimum wage to 15 euros per hour starting in 2026 and threatened legislative intervention if they neglected to comply. Although the Minimum Wage Act stipulates that the commission should use increases in collectively agreed wages as a reference point, this would only justify an increase of around 14 euros, according to data from the Federal Statistical Office.
Kampeter stressed the importance of the commission making a balanced assessment in light of the challenging economic situation. He claimed he lacked the vision to justify a steep increase of 17% to 15 euros at present, emphasizing the need for prudence rather than unrealistic aspirations.
Industry Perspectives
Businesses and the Confederation of German Employers' Associations voice their opposition for several reasons:
- Gesamtmetall: Led by Oliver Zander, Gesamtmetall takes issue with the proposal owing to potential negative economic consequences and the potential disruption of collective bargaining structures.
- Central Association of German Crafts: Jörg Dittrich argues that minimum wage decisions should be in the hands of a commission rather than political entities, taking a stand against the politically mandated increase.
- CDU/CSU: The CDU/CSU, part of the coalition government, exercise caution regarding the proposed increase, arguing for decisions to be grounded in the coalition agreement rather than mere political inclinations.
The Confederation of German Employers' Associations, specifically Gesamtmetall, expresses concern over the proposed minimum wage hike due to potential economic repercussions and a disruption of collective bargaining structures.
In light of the minimum wage debate, the need for vocational training within the community becomes increasingly important to maintain a competitive and cost-effective workforce. Such training programs can help mitigate the effects of wage inflation and keep businesses financially stable, thereby facilitating long-term growth and success.
