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Why Germany's proposed minimum wage increase has been called a 'scandal'

The Local Germany
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Why Germany's proposed minimum wage increase has been called a 'scandal'
Coins and a banknote worth €12.41 lie on a kitchen worktop. Photo: picture alliance/dpa | Marijan Murat

From January 1st next year, Germany's statutory minimum wage will rise from €12 to €12.41 and then again to €12.82 in January 2025. But the decision has been met with widespread criticism.

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Germany's Minimum Wage Commission presented its plans for the increase in the country's minimum wage over the next two years on Monday, which will see the minimum wage rise by 41 cents in both 2024 and 2025.

Comprising of three employer representatives, three trade union officials, two academics, and a chairperson, the Commission decides on the minimum wage adjustments every two years. However, this time, the decision they were not able to reach a unanimous decision. The employee representatives on the commission have since expressed their disagreement with the decision, claiming to have been outvoted.

Stefan Körzell, a board member of the German Trade Union Confederation (DGB) and a member of the Minimum Wage Commission, criticised the decision, stating that a "mere cent-range adjustment" was unacceptable. 

Körzell argued that the nearly six million minimum wage workers would suffer a significant real wage loss and emphasised that the minimum wage should have been raised to at least €13.50 to provide adequate protection and to offset inflation. As of July, the rate hovered above six percent.

However, the employers on the Commission and the chairwoman rejected this proposal.

READ ALSO: Is Germany becoming a 'low wage' country?

The decision was met with criticism from other labour experts.

Thorsten Schulten, Head of the Labor Market and Collective Bargaining Policy Department at the Institute of Economic and Social Research (WSI), called the decision a "scandal,” and criticised the fact that the Commission were not able to reach a consensus, as it had in previous years.

In an interview with the Berliner Zeitung, Schulten said that: "The employers are shooting themselves in the foot with this decision."

In some industries, he said, it may be difficult to find skilled workers due to the small wage increase and that, from an overall economic perspective, further loss of purchasing power will continue.

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During the press conference in Berlin, Chairwoman of the Minimum Wage Commission Christiane Schönefeld acknowledged the significant differences in positions. 

The proposed increase in the minimum wage still requires the formal endorsement of the federal government through regulation.

Typically, this step is a mere formality, but given the split decision from the Commission and its early criticism, its unclear whether the proposed wage increase would remain unchanged. 

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