Keeping the Minimum Wage Below 15 Euros: The Commission's Decision Explained
Reason for Minimum Wage Remaining at 40 Cents Below 15 Euros - Reason for Minimum Wage Remaining Under 15 Euros
Let's delve into the details of why the minimum wage in Germany won't reach 15 euros anytime soon. Here's a breakdown of the reasons behind the decision, the reaction from all parties involved, and potential consequences:
How much will the minimum wage increase?
The hike starts from the current 12.82 euros to 13.90 euros in 1.5 years, which represents a 13.9% increase. This equates to around 190 extra euros per month for full-time workers from 2026, with an additional 310 euros monthly in 2027, totaling 3,700 euros yearly.
Why aren't workers getting 15 euros per hour?
The Minimum Wage Commission, consisting of employer and trade union representatives and an independent chairperson, makes its decisions taking into account labor market conditions and the economy. Facing a possible third year of recession, the commission needs to make sure the increases don't jeopardize employment or place excessive pressure on businesses.
How did the commission arrive at 14.60 euros in 2027?
The commission assessed the development of collective wage agreements and the average wage in Germany. As a rough guideline, the minimum wage should be 60% of the average income of full-time employees to ensure an adequate standard of living. According to Commission Chair Christiane Schoenefeld, forecasting values of 15 euros in 2026 isn't realistic, and the previous collective wage development rate is also taken into account.
What can we expect from the SPD?
Despite advocating for a 15 euros minimum wage throughout their campaign, initial reactions from the SPD have been positive, with Dagmar Schmidt expressing respect for the commission's unanimous decision. Spokesperson Bas promises swift implementation and views the increase as a step in the right direction, despite acknowledging that more could have been achieved.
Perspectives from employers and trade unions
Stefan Körzell, a board member of the DGB and lead negotiator, describes the result as a hard-fought victory, recognizing that some employers had preferred no increase at all. On the other hand, Steffen Kampeter from the employer's side praises the cooperation between employers and trade unions, acknowledging that it necessitated painful compromises from both sides.
Economists' opinions and potential impacts on prices
Economist Veronika Grimm commends the commission's realism in setting wage levels to avoid political interference disrupting market dynamics. On the contrary, Hagen Lesch, a labor market expert from the employer-associated Institute of the German Economy, fears the progressive loss of low-skill jobs. Both sides agree that there might be an impact on prices, but the risk of a wage-price spiral is deemed unlikely.
In summary, the Minimum Wage Commission's careful approach alleviates recurrent economic challenges by incrementally raising the minimum wage to €13.90 in 2026 and €14.60 in 2027. This pragmatic strategy reflects a delicate balance between economic growth, labor market concerns, political aspirations, and the trade unions' demands, all while attempting to strengthen workers' income while minimizing potential negative effects on the economy and employment[1][2][3][5].
Keywords:
- Minimum wage
- Germany
- Economic conditions
- Inflation
- Labor market impacts
- Political considerations
- Employers
- Trade unions
- Employment
- Recession
- GDP growth
- Housing inflation
- Wage-price spiral
- The decision to increase the minimum wage in Germany to €13.90 in 2026 and €14.60 in 2027, as set by the Minimum Wage Commission, is influenced by the ongoing economic conditions and labor market impacts.
- The potential consequences of this decision, such as employment stability and business viability, are being carefully considered to ensure a balance between economic growth and workers' income, as the Commission navigates through political considerations and trade union demands.
[1][2][3][5] referenced sources in the original text.
