On Wednesday, April 9, 2025, politicians from the CDU/CSU and SPD presented the draft of a new coalition agreement, which includes significant plans for the minimum wage in Germany. The proposed changes aim to raise the minimum wage to 15 euros per hour by 2026, depending on recommendations from an expert commission.
The statutory minimum wage was first introduced in Germany in 2015 at a rate of 8.50 euros gross per hour. Since then, it has seen several increases, including a notable rise in October 2022 to 12 euros per hour, and a further adjustment to 12.41 euros in January 2024. As of January 1, 2025, the minimum wage will increase again by 41 cents to 12.82 euros.
According to the plans outlined in the coalition agreement, the minimum wage commission will base its recommendations on tariff developments and aim for a wage that constitutes 60 percent of the gross median wage for full-time employees. This approach is intended to facilitate the target of reaching a minimum wage of 15 euros by 2026.
Notably, not all EU countries have a minimum wage; nations like Denmark, Italy, Austria, Finland, and Sweden do not implement such a standard. However, Germany currently ranks second in Europe regarding minimum wage levels as of 2023.
The discussion surrounding the minimum wage has been contentious. Proponents argue that a higher minimum wage is essential for combating poverty and ensuring fair wages. They contend that without a minimum wage, employers might exploit workers by offering unreasonably low salaries, making it difficult for individuals to sustain a living despite hard work.
On the other hand, opponents of a significant wage increase caution that it may lead to job losses, as businesses could struggle to cope with the increased labor costs. They argue that this could result in a sluggish economy, where fewer jobs are available and workers may ultimately earn less than before the wage increase.
According to estimates from the German Trade Union Confederation (DGB), around six million workers with very low incomes would benefit from the proposed increase to 15 euros. The statistical data indicates that in April 2024, approximately 9.5 million jobs paid less than 15 euros per hour.
The coalition agreement also addresses various other economic measures, including tax reductions for small and medium incomes, adjustments to the commuter allowance, and the retention of the Germany ticket for local transport. The ticket currently costs 58 euros per month, and users should prepare for price increases starting in 2029.
In terms of fiscal responsibility, the coalition plans to implement austerity measures within the federal administration, aiming to reduce staff by eight percent over the next four years, with exceptions for security agencies. Additionally, it aims to save one billion euros on funding programs and contributions to international organizations.
In the realm of social policy, the coalition intends to revise the current Bürgergeld system, tightening conditions for eligibility. This includes the potential for complete withdrawal of benefits for individuals who repeatedly refuse reasonable job offers. The coalition also plans to increase the housing allowance for students under the Bafög program from 380 to 440 euros per month.
Furthermore, the coalition has expressed intentions to address issues related to migration, with a focus on maintaining asylum rights while also implementing measures to manage irregular migration effectively. The proposed changes include a return to stricter regulations regarding family reunification for refugees with limited protection status.
Amidst these discussions, the coalition partners are also contemplating reforms in the energy sector, including a new building energy law to replace the current heating law, which they aim to make more flexible and technology-neutral. They also plan to introduce an industrial electricity price to relieve energy-intensive companies.
As the coalition progresses with its agenda, the question remains: will the proposed minimum wage increase successfully address the economic disparities faced by low-income workers, or will it inadvertently lead to higher costs for consumers and potential job losses? The next meeting of the minimum wage commission is already scheduled for the summer of 2025, where these crucial discussions will continue.
In summary, the proposed increase in the minimum wage to 15 euros per hour by 2026 reflects a significant shift in Germany's labor market policies. While many advocate for this change as a necessary step toward ensuring fair compensation, the potential consequences on the economy and employment remain a point of contention. As the coalition moves forward, it will be essential to monitor the outcomes of these discussions and their impact on both workers and businesses alike.
