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EXPLAINED: When will Germany raise the minimum wage?

The Local Germany
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EXPLAINED: When will Germany raise the minimum wage?
A woman vacuums a corridor in a hotel. Photo: picture alliance/dpa | Daniel Reinhardt

The pledge to raise wages for Germany’s lowest earners to €12 per hour was a key electoral promise for Olaf Scholz’s SPD party, and now it looks set to come into force later this year. Here's what you need to know.

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What's going on?

On Wednesday, the German government wants to begin the process of raising the minimum wage to €12 per hour. The cabinet has approved a bill put forward by Labour Minister Hubertus Heil (SPD) that will see the minimum wage hiked in Germany on October 1st this year. 

Isn't the minimum wage already set to rise?

That's right. On January 1st 2022, the minimum wage in Germany increased from €9.60 to €9.82 and it is set to rise again on July 1st to €10.45. These increases were laid out in a law which came into force in November 2021, following the guidelines of the Minimum Wage Commission which decides on the regular increases to earnings on the basis of previous wage development.

READ ALSO: EXPLAINED: How the minimum wage will increase in Germany in 2022

But the plan to hike the minimum wage up to €12 is a change from the usual procedure and will mark a one-off increase of around 15 percent. When introducing the draft bill, Germany’s labour minister Hubertus Heil said that the minimum wage in Germany was below average compared to the rest of Europe - the additional increase of €1.55 is a one-time law would help address this.

According to the draft, the minimum wage will remain unchanged for 15 months and the next increase, due on January 1st 2024 will again be decided by the Minimum Wage Commission of employers and trade unions.

The plan for the one-time hike was a flagship pledge of the centre-left SPD in the run-up to the September 26th elections last year. It is one of the first and most significant policies of the new traffic-light coalition that is set to come into force.

Who will benefit from the €12 minimum wage?

According to the draft law, 6.2 million workers earn an hourly wage below €12 and around 111,000 are even dependent on basic income support despite full-time employment. The increase to €12 euros would help to ensure that all workers earn at least 60 percent of the average gross wage as, according to experts, a minimum wage that is below 60 percent of a country's median wage could mean that many low-income earners end up poverty. 

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READ ALSO: German employers weigh up legal challenge to €12 minimum wage

Those who are employed as so-called minijobbers will also benefit from the wage increase. The coalition agreement of the SPD, Greens and the FDP states: "In future, the mini-job limit will be based on a weekly working time of ten hours at minimum wage conditions. When the minimum wage is raised, it will be accordingly increased to €520."

That means the increase from €450 to €520 per month for mini-jobs is also set to come into force with the minimum wage rise on October 1st.

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