Germany’s new traffic light government is making good on one of its cornerstone coalition agreement policies and raising the minimum wage to 12 euros per hour. Despite some pushback from employers, the Federal Labour Ministry has insisted the project will be implemented this year.

German minimum wage to go up at least twice in 2022

The minimum wage in Germany is already increasing in two stages in 2022. As of January 1, 2022, it has risen to 9,82 euros per hour, and from July 1, 2022, it will go up again to 10,45 euros per hour. But that’s not where the increases stop.

The SPD party fought the last federal election under the promise to increase the minimum wage to 12 euros per hour, and wants to push the policy through this year. “As candidate for chancellor, Olaf Scholz said we would increase the minimum wage to 12 euros within a year,” explained Federal Labour Minister Hubertus Heil. “And we will increase it in 2022 because it is necessary.” 

Heil said that he would present a draft law “in the next few weeks," to be voted on by Germany’s parliament. “The increase to 12 euros will and must come,” he insisted. “It’s a question of fair performance and respect for decent work.” 

Pushback from employers’ associations in Germany

However, the plan is being thrown into potential jeopardy by a legal challenge from employers’ associations in Germany. Rather than the wage increase itself, they have taken issue with how the government is proposing to push it through.

Since the minimum wage was first introduced in Germany in 2015, its periodic increases have been carefully controlled by representatives of employers and trade unions, who make up the Minimum Wage Commission. The commission’s job is to carefully balance factors like demand and supply, market rates, cost of living, and collective bargaining agreements to set a wage that is both fair and competitive. 

Some therefore see the government’s plan to circumvent the commission, and impose a one-off increase of the minimum wage, as inappropriate. “The way it is being proposed by the federal government at the moment is a gross violation of collective bargaining autonomy,” explained Rainer Dulger, president of the Confederation of German Employers’ Associations (BDA). “The Minimum Wage Commission is the guardian of the minimum wage, and not politics.” 

Hans Peter Wollseifer, president of the German Confederation of Skilled Crafts, added that the expedited increase risked disrupting the carefully-balanced relationship between the Minimum Wage Commission and trade unions: “If the minimum wage of 12 euros should come already in 2022, that would make around 200 collective agreements… obsolete,” he told the dpa. He suggested setting a target of 12 euros, but leaving the date up in the air, to give collective bargaining more time to adjust. 

German Labour Minister says wage increase will benefit millions

Heil has, however, rejected the employers’ associations’ criticisms as misguided, arguing that they place too much emphasis on collective bargaining agreements. “Only 48 percent of employees are covered by collective bargaining agreements,” he said to ARD, adding that many people work for far too low wages and can “barely make ends meet despite working full-time.” 

“Millions of people in Germany would benefit from the increase,” he emphasised, “including women and many people in East Germany, where the low-wage sector is particularly large due to a lack of collective bargaining coverage.” He added that it was also a matter of proving to people that they could trust democratic politics to implement election promises.