EXPLAINED: How the minimum wage will increase in Germany in 2022
The current German federal minimum wage is €9.60 per hour, but could increase to as high as €12 in 2022. Here’s what you need to know.
A centrepiece of the new German government’s promise to support workers was an increase in the country’s minimum wage.
New Chancellor Olaf Scholz promised to raise the minimum wage to €12, up from the current level of €9.60.
Scholz claims the move will benefit around 10 million people who rely on statutory minimums.
This will however be introduced in stages.
On January 1st, the minimum will go up to €9.82.
It will then be increased on July 1st to €10.45.
When will it be increased to €12?
The ultimate plan is for the minimum standard to then be increased to €12 by the end of 2022 - a promise labour minister Hubertus Heil reiterated on the final day of 2021.
Whether it will be further increased in 2022 - or at all - is somewhat in jeopardy however, due to a legal challenge.
Speaking to DPA on Thursday, Rainer Dulger, president of the Confederation of German Employers’ Associations (BDA), said the issue wasn’t with raising the minimum wage, but rather with the route chosen to get there.
“The way it is being proposed by the federal government at the moment, it is a gross violation of collective bargaining autonomy,” he said.
Furthermore, the earnings limit for mini-jobs will rise from €450 to €520, and for midi-jobs to €1,600 (from the current €1,300).
A mini-job is a position in Germany where the employee earns no more than a certain amount each month, allowing people to work fewer hours free of tax. A mini-jobber, which also belongs to the category of low-income earners, receives a reduced tax burden.
Wages for people in neither of these two categories could also be set to increase in 2022.
Economics experts believe the country's aging population and ongoing skills gap could mean that workers in Germany are in for a pay rise.
Speaking to German daily Bild, Gabriel Felbermayr, the head of the Institute for the World Economy (IfW) in Kiel said that “the situation for workers in Germany is the best it’s been in 30 years.”
According to Felbermayr, Germany’s ageing population and shortages of labour mean wages could rise by around five percent on average over the next year.
How does Germany’s minimum wage work?
For many people - in particular those from English-speaking countries other than the United States - it may be surprising to learn that Germany only introduced a minimum wage for the first time in 2015.
The minimum, then €8.50, was introduced in 2015 by former Chancellor Angela Merkel in response to pressure from the centre-left Social Democrats, her coalition partner.
The minimum wage rules have been structured so as to allow the standard to increase over time.
Since the minimum wage was first introduced in Germany in 2015, representatives of business owners and employees have been tasked with setting increases as part of the Minimum Wage Commission.
After being first implemented in New Zealand and Australia in the 1890s, minimum wage laws have spread across the world. They are now in place in most European countries.
That does not however mean that your employer is free to pay you as much – or as little – as he or she wants in Germany.
Instead, the minimum amount you can be paid will be determined through negotiations with your employer which will may feature a trade union representative.
In many cases, minimum standards are not set by law, but by collective or individual bargaining with your employer.
Generally, collective agreements will be negotiated by trade union representatives and will apply to an entire industry or in an entire state, meaning that you yourself do not need to negotiate.
There are however some jobs or industries – usually for jobs with higher incomes or which are less common – where negotiations will take place on an individual basis.
These agreements will not just cover a minimum payment amount, but they will also set benefits, holiday pay and working conditions.
to consider – erwägen
Minimum wage increase – (die) Mindestlohn-Erhöhung
Employer – (der) Arbeitgeber
to reinstate – wieder einsetzen
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