Since a statutory minimum wage was introduced in Germany in 2015, it is not the government that decides on the amount, but a commission. So far, the three employers and trade unionists and the neutral chairmanship have pulled together. This time an open argument breaks out. This raises doubts as to whether the body is still suitable for the task that is important to many citizens: almost six million employees and their families benefited from the last increase in the minimum wage to twelve euros, according to the Federal Statistical Office.
Now the majority of the government commission is proposing to increase the minimum wage by 41 cents each at the beginning of 2024 and 2025 to then 12.82 euros. That’s an increase of a good three percent. In other words, half as much as inflation will amount to this year according to economic forecasts. “It’s shameful that employers want to save on the financially weakest when prices are high,” says Stefan Körzell of the German Trade Union Confederation (DGB).
As a result of the decision, the real payment of the almost six million minimum-wage employees will shrink enormously. “In order to ensure minimum protection and compensation for inflation, there should have been at least an increase to 13.50 euros.” Social associations had spoken out in favor of 14 euros and pointed out that higher wages later lead to higher pensions.
“This is revenge for the twelve euros”
But Körzell and the other trade unionists were simply outvoted by the employers on the commission. This has never happened since the committee set the legal minimum wage, which no company may fall below. According to reports, the neutral committee leader Christiane Schönefeld, ex-chairman of the Federal Employment Agency, offered several compromises. When the employers insisted on the lowest proposal, she voted the decisive factor – against the unionists.
The employers probably insisted on not simply taking the current minimum wage of twelve euros as the basis for an increase, but the much lower last proposal by the commission of 10.45 euros. As a result, the increase is small. In fact, the decision states: “The majority applied the increase in the tariff index to the value of the Commission’s last decision of 10.45 euros and at the same time took into account the increase of 1.55 euros caused by the legislator.”
Only taken into account? That sounds absurd, but it has a political background. With the last increase in the minimum wage to twelve euros in 2022, the federal government for the first time ignored the commission, which proposed much less. Chancellor Olaf Scholz (SPD) had promised during the election campaign to significantly raise the statutory minimum wage, which many skeptics believe has risen too slowly for years.
“The tough attitude of the employers is revenge for the twelve euros,” say trade unionists. Criticism has also been raised about the new head of the Schönefeld committee. She bowed too much to employers instead of looking for a compromise that was acceptable to everyone.
Employers defend the small increase in wages: “An increase in the minimum wage that is too significant and too rapid would be very difficult for many companies to cope with,” said Stefan Genth, Managing Director of the German Trade Association. The resolution refers to the weak economic growth, which represents a major challenge for companies.
Thorsten Schulten from the WSI Institute, which is close to the trade union, criticizes the fact that the commission is required by law to weigh up all the circumstances. But they ignore inflation. “You don’t need a commission to simply apply the tariff index to the last proposal, which is also outdated. Next time, the Federal Statistical Office can do that.” This opens the debate as to whether the disputed minimum wage committee is still up to the task.
Federal Labor Minister Hubertus Heil (SPD) announced that he would implement the decision. “I know that workers and unions would have liked a higher minimum wage,” he said. According to the law, the federal government can only implement the Commission’s proposal – or not. Then the lower wage limit would not rise on January 1st, which is irresponsible in view of the inflation trend.
However, as in 2022, the government can very well ignore the commission and decide on a larger increase. There are probably two reasons why the SPD labor minister prefers to endure the disappointment of the unions. On the one hand, the SPD was criticized for overturning the commission’s decision in 2022. The determination by the committee is intended to reduce direct political influence. The model is Great Britain, which has set the minimum wage since it was introduced in the 1990s.
Secondly – and more importantly: Heil would need the FDP for a greater increase in the minimum wage. And that would risk another coalition crash. The liberals did not like the unscheduled increase to twelve euros at all. They only agreed in the coalition negotiations because they received something in return, such as the waiver of tax increases, which in turn was difficult for the SPD and the Greens.