This Friday, the Bundestag gave the green light for one of the SPD’s most important election promises last September: raising the minimum wage. Thanks to the votes of the deputies of the three parties of the so-called traffic light coalition (SPD, Greens and FDP), the Bundestag approved a 25 percent increase in the minimum wage from the current 9.82 euros per hour to 12 euros.
Around 6.2 million people benefit from this, above all women and employees from eastern Germany. The increase is scheduled for October 1 and will take effect in two phases. In the first, in July, the minimum wage rises to 10.45 euros, while in October it reaches 12 euros. At the same time, it is planned to raise the minimum wage limit for so-called mini jobs – jobs for a few hours – from 450 to 520 euros per month, a measure that will benefit more than six million employees.
The draft law prepared by the Ministry of Labor was approved by the Council of Ministers on February 23. This Friday, the parliamentary majority of the governing coalition and the votes of the left agreed to the increase. The CDU parliamentary group and the far-right AfD abstained in the final vote.
“Anyone who previously earned 1,700 euros gross full-time on the basis of the minimum wage will in future receive 2,100 euros,” said the Social Democrat, Labor Minister Hubertus Heil, in the Bundestag. The politician added that this increase is only a first step. “That’s why we will make sure that federal orders only go to companies that pay collective agreements in the future,” he said.
Raising the minimum wage to 12 euros was practically the key to opening the door for the coalition government currently in power in Germany. The Greens and the FDP Liberals agreed to raise taxes, not raise them, in a tentative pact that launched formal negotiations between the three forces. The 12-page document, presented on October 15 last year, laid the groundwork for a possible executive that would be headed by Social Democrat Olaf Scholz, then finance minister in Angela Merkel’s incumbent government.
One of the most important points of these preliminary negotiations was the decision to increase the minimum wage from 9.6 euros per hour to 12 euros in the first year of government, which corresponds to an increase of 25% in one go. A commission would also decide on future increases. That was the central demand of the Social Democrats, supported by the Greens but viewed with suspicion by the Liberals.
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The minimum wage hike was criticized by the Confederation of German Employers’ Associations (BDA), which complained that the policy had bypassed the Minimum Wage Commission, where employers and unions normally negotiate increases. For its part, the German Trade Union Confederation (DGB) complains that the minimum wage for mini-jobs will be extended. According to official figures, more than seven million people are employed in this modality, but these contracts are practically free of social costs for the employer ―who contributes a maximum of 31 euros per month for each worker―, while the worker must contribute to the pension insurance 3.1% of this income.
The introduction of a cross-industry minimum wage in Germany was decided in the second grand coalition chaired by the conservative Angela Merkel, supported by the then labor minister, the social democrat Andrea Nahles. A fee of EUR 8.40 per hour was then set, a level that gradually rose to the current EUR 9.8 in later adjustments.
During Merkel’s last term in office, it was already planned that the minimum wage should rise again to 10.45 euros per hour in 2022. During the election campaign, the SPD promised to raise it to 12 euros, which was supported by the Greens. That was one of the great trump cards of Scholz’s election campaign, whose party emerged as the strongest party in the last federal elections with 25.7% of the votes.