The minimum wage is not just any topic for Olaf Scholz. Increasing it to twelve euros is his “most important law,” the SPD politician had said during the election campaign, and that he would “get it under way immediately” as Chancellor. So far things are looking good for Scholz, even the business-friendly FDP supports his project, and the responsible minister Hubertus Heil has already got to work: “In the next few weeks” he will present the draft law, Heil said at the beginning of January.
The question is, however, whether things will continue so smoothly, because protests are forming in the employers’ camp. Collective bargaining autonomy, i.e. the right of employers and unions to negotiate collective agreements and thus wages without state interference, is constitutionally protected, Employers President Rainer Dulger recently warned and announced that the federal government’s plan would be “qualified for legal review”. In the end, there could be a lawsuit against the minimum wage increase before the Federal Constitutional Court – and thus a threat to the Chancellor’s “most important law”.
The unions reacted angrily. “A lawsuit is nonsense,” said the head of the German trade union federation, Reiner Hoffmann. Verdi boss Frank Werneke went even further: “The allegation of an attack on collective bargaining autonomy can hardly be surpassed in terms of hypocrisy.” It is the employers who often refuse to negotiate and thus ensure that collective bargaining coverage in Germany continues to decline. Raising the minimum wage is one answer.
Werneke correctly said that the federal government wants to get the twelve euros on the way as soon as possible. “The prices for many goods and services are rising sharply, especially energy costs. That affects people now, not someday.”
Are there mass layoffs?
The question remains how realistic it is that a lawsuit will bring down the increase in the minimum wage. The lawyers agree on one thing: the Confederation of German Employers’ Associations (BDA) itself could hardly turn to the Federal Constitutional Court with great prospects of success. As she does not engage in collective bargaining, her complaint would probably not be admitted. It would look different if an employers’ association appealed to the Federal Constitutional Court itself; then there would probably be a substantive review. How would she turn out? There are different opinions about this.
Employment lawyer Markus Künzel from the law firm Beiten Burkhardt, which is close to employers, believes the chances of success are high. “An increase in the minimum wage to twelve euros would be an intensive intervention in the constitutionally protected collective bargaining autonomy,” he says. Such interference may be permissible if it is proportionate. Künzel argues that this proportionality was violated in particular by the point in time at which the federal government wanted to increase the minimum wage to twelve euros – according to the announcement later this year. The Minimum Wage Commission, a body made up of trade unionists and employers, actually decided that the minimum wage should increase from the current 9.82 euros to 10.45 euros per hour on July 1st. The employers have now adjusted to this. A further increase to twelve euros would hit them suddenly, would be too high and therefore not proportionate, argues Künzel.
Cologne law professor Ulrich Preis sees it differently. In 2014, he wrote an expert opinion on the minimum wage on behalf of the trade union-affiliated Hans Böckler Foundation; he comes to the conclusion that he is constitutional. A year later, the minimum wage of EUR 8.50 was introduced, but three lawsuits against it were unsuccessful. Price points out that the legislator has a duty to protect employees, including protection against unreasonably low wages. This would justify an intervention in the collective bargaining autonomy. “The federal government must now provide good reasons why the twelve euros represent a living minimum. I believe that these good reasons exist,” says Preis. He refers to studies into what hourly wages would be needed to prevent employees from slipping into poverty in old age. According to figures from the federal government, they would have to work full-time for 45 years and earn at least 12.63 gross.
Another point that could prove the disproportionality of the minimum wage increase would be the threat of mass layoffs. However, these did not materialize when the minimum wage was introduced in 2015. This time, too, they are considered unlikely: recently two Mannheim economists came to the conclusionthat the labor market could only topple above a minimum wage of 13 euros.