For the millions of employees in Germany, the legal minimum wage is set to raised two times next year.
On Wednesday, the federal cabinet decided that, from January 1st, 2019, the universal lower threshold will be increased from its current €8.84 an hour to €9.19. From January 1st, 2020 it will be increased further to €9.35.
But there is still demand raise it even further to €12 an hour. Despite a booming economy, millions of people in Germany still live on the poverty line; almost a fifth of the population in the last year was threatened by poverty of social exclusion, according to the Federal Office for Statistics.
Federal Minister for Work Hubertus Heil (SPD) said that the introduction of the minimum wage in 2015 was “a necessary and just step, adding that “it’s right to update it regularly.”
But according to Heil, the changes still only pertain to the absolute minimum wage; it’s thus necessary to expand the commitment to collective wage agreements in the economy, so that more people have the chance to earn a higher wage.
'Still too low'
The minimum wage increases follow a vote carried out in June by a commission of employers, unions and scientists. The social association VdK criticized that “this few cents won’t help afflicted people any further.” According VdK, the minimum wage is still too low and will not protect people from poverty.
The lower wage limit applies to all employed adults – apart from long-term unemployed people who have taken up a job within the last six months. It also doesn’t apply to apprentices who are undertaking obligatory internships or internships lasting under three months.
The minimum wage was raised for the first time in 2017 from €8.50 to €8.84. The basis for this was the development of average collective wage. In several industries the minimum wage is above the basic minimum wage.
Vice Chancellor Olaf Scholz (SPD) has put his demands on the table for an even higher legal minimum wage. He considers 12 euros “reasonable”, according to an article he wrote in Bild online, and that “companies should not save on wages.” But a jump to €12 is hardly viable under the current Grand Coalition.
Threatened by poverty
As the Federal Office for Statistics reported, 15.5 million people in Germany were threatened by poverty or social exclusion. That equated to around 19 percent of the population, which was a slight decline from 2016, when 16 million people in the country – or 19.7 percent of the population – was affected. The statistics office refers to data from the survey “Life in Europe” (EU-SILC). In the EU as a whole, 22.5 percent of the population in 2017 fell into this category.
For the survey “Life in Europe”, around 14,000 households in Germany alone are surveyed by letter every year, according to information from the Federal Office for Statistics. The investigation by questionnaire can thus be considered representative.
According to EU definition, the survey considers someone as “at risk of poverty” when they have less than 60 percent of the median income of the population. In 2017, this amount was set at €1096 a month for someone living alone. For two people with two children under 14, it was €2302. In the past year, 13.1 million people, or 16.1 percent of the population, was thus considered “at risk”.
The definition for “threat of social exclusion” is a bit wider; it also means that the money in a household is insufficient for rent, a TV, heating or a week-long holiday. In 2017, this affected 3.4 percent of the population.
The president of VdK Deutschland, Verena Bentele, spoke of the shockingly high figures. “It’s scandalous that, in spite of Germany’s economic boom, 15.5 million people are threatened by poverty or exclusion.”
She demanded an overall plan of the fight against poverty. “That includes educational opportunities as well as a newly adjusted job market policy.”