The minimum wage is an issue that has a range of positive and negative effects in the countries that introduce it, including Germany. After years of debate, it was introduced in Germany in 2015 and marked a significant change in the economic system that continues to influence the country today.
The history of the minimum wage in Germany
Until 2014, Germany was one of the few countries in the European Union that had not introduced a minimum wage as a basis. To date, only five countries (Denmark, Italy, Austria, Finland and Sweden) maintain this approach. These countries argue that they defend the right to free choice and freedom of negotiation and that collective agreements guarantee effective bargaining.
Furthermore, some academics believe that if the minimum wage is regulated, small businesses would not be able to afford this annual adjustment and would have to close their doors or even relocate to other countries, which would have a significant economic impact.
The discussion about the minimum wage law in Germany took a long time because of concerns about the potential economic and legal impact on society. However, it was passed in order to strengthen the autonomy of collective bargaining and thus create legal certainty for many employees, who, according to the German government, would receive a total of 3.7 million wage increases in the first year.
After long debates, the Minimum Wage Act (MiLoG) came into force on 1 January 2015, which stipulates a gross hourly wage of EUR 8.50. Even after eight years, the German minimum wage is having a remarkable impact and, according to statistics, was the second highest in the European Union in 2023 at EUR 12.00 gross per hour, after Luxembourg at EUR 13.80.
Development of the minimum wage in recent years
Unlike some countries that have introduced a fixed monthly rate, Germany has opted to set the hourly rate for the hour worked. This means that the fixed minimum hourly rate was EUR 8.50 gross when the general minimum wage came into force and rose to EUR 12.41 gross per hour by January 2024.
The change in the German minimum wage between 2015 and 2020 did not take place annually, but fluctuated between 0.30 and 0.40 cents during this period, while from 2021 onwards the values changed several times in the same year with the change of government, see the following table with the changes in recent years:
- January 2015 EUR 8.50
- January 2017 EUR 8.84
- January 2019 EUR 9.19
- January 2020 EUR 9.35
- January 2021 EUR 9.50
- July 2021 EUR 9.60
- January 2022 EUR 9.82
- July 2022 EUR 10.45
- October 2022 EUR 12.00
- January 2024 EUR 12.41
Following the recent economic experience with the minimum wage and its application, this remains an issue of concern for employers, as the increase in the minimum wage has been relatively high over the last two years, which has led to an increase in the values of other economic sectors.
Minimum wage from January 2024
Finally, the existence of the minimum wage in Germany continues to have an impact, so the annual change in the amount will continue to be adjusted. By decision of the federal government, the minimum wage will increase in two stages, but not in the same year as 2022. The first change will begin on 1 January 2024, from EUR 12.00 to EUR 12.41 per hour, and the second change will take place at the beginning of 2025 with an increase of a further 0.41 cents to a total of EUR 12.82 per hour.
No rule without exception
Excluded from entitlement to the statutory minimum wage are groups of people who are not considered employees within the meaning of the MiLoG. These include
Trainees,
young people under the age of 18 without completed training,
volunteers,
long-term unemployed persons in the first six months of their employment,
Trainees completing an internship within the meaning of the Minimum Wage Act (MiLoG),
Persons doing voluntary service,
Participants in an employment promotion programme,
Home workers in accordance with the German Home Work Act (Heimarbeitsgesetz),
self-employed persons
prisoners.
The minimum wage is an issue that affects society both economically and financially, and it is important to be aware of these changes.
We are at your disposal to answer questions and clarify doubts on this important topic.