Ten years ago, the grand coalition decided to introduce a statutory minimum wage. It was available from the beginning of 2015 – for 8.50 euros. Have the economists’ fears come true?
The cabinet meeting had just ended when the then Labor Minister Andrea Nahles, ten years ago today, gave a press conference. “With today’s cabinet decision, the way for the minimum wage is clear.”
At the time, the trade union-affiliated Hans Böckler Foundation spoke of one of the “biggest social reforms of the post-war period”. For them, the minimum wage was overdue to curb the growing low-wage sector. Others – such as the Council of Experts – saw jobs at risk, and economists warned of the loss of hundreds of thousands of jobs.
Gabriel: “Dignity of a working person”
The then SPD leader and Economics Minister Sigmar Gabriel took a strong stance against this. “It’s about the dignity of a working person. Anyone who goes to work and then works full time and then has to go to the social welfare office to beg at the end of the month – that’s undignified. We’re changing that.”
At first nothing changed. First the plan had to go through parliament and then it took until the beginning of 2015 before the nationwide minimum wage of 8.50 euros became a reality.
Comprehensive? It would be nice, criticized left-wing parliamentary group leader Gregor Gysi at the time. “Of the six million who would have directly benefited from the nationwide statutory minimum wage, only 3.5 million now receive it. Then it is no longer nationwide if there are so many exceptions. I would say: the long-term unemployed, the young people, the seasonal workers.”
Scholz: “Respect and recognition”
Every two years, the Minimum Wage Commission proposes to the federal government how much the minimum wage should increase. It includes employer and employee representatives and – in an advisory capacity – scientists.
Everything was different in October 2022: The minimum wage climbed to 12 euros – once by law, not on the recommendation of the commission. In doing so, the new traffic light government implemented a campaign promise.
Where Sigmar Gabriel spoke of dignity, Olaf Scholz brought something else into the conversation: “That’s why the first word that should be associated with my candidacy and chancellorship is respect and recognition.”
Debate about government intervention
And then it was back again, the debate about state intervention and the free market, about social security and job losses, also led by the CDU candidate for chancellor Armin Laschet. “Some say 12, the left says 13, soon the AfD will say 15 euros. That actually distorts what it’s all about: preserving jobs and paying people fairly.” Laschet lost, Scholz won, the minimum wage rose to 12 euros.
Since then it has been the Commission’s turn again. They decided on two increases of just 41 cents each – for the first time not unanimously. The employee representatives were outvoted.
However, Scholz does not want to intervene legally a second time. But the SPD politician says: “What is clear is that we are all somewhat disappointed by the specific proposal.”
No bigger ones Employment losses
The Institute for Labor Market and Occupational Research came to the conclusion in 2022 that neither the introduction of the minimum wage nor the subsequent increases had led to major job losses. Also because the increases lagged behind the general wage development.
This path was abandoned with the significant legal increase. However, there is not yet enough data to assess what consequences this will have.
Kai Clement, ARD Berlin, tagesschau, April 2nd, 2024 8:10 a.m