Income: Controversy over future minimum wage - inflation increases the pressure

In view of the high inflation, a dispute about the next minimum wage increase in Germany has flared up.

Income: Controversy over future minimum wage - inflation increases the pressure

In view of the high inflation, a dispute about the next minimum wage increase in Germany has flared up. Social associations are demanding a sharp increase from 12 to 14 euros and more. Employers warned of "unrealistic heights". But the unions and the SPD are also calling for greater relief for employees.

Federal Chancellor Olaf Scholz (SPD) made it clear that advocates of a strong increase should not expect direct help from politicians again. The Minimum Wage Commission is again responsible. Behind their closed doors, the struggle for the 2024 minimum wage is now starting.

Steep increase required

More than seven years after its introduction - in 2015 with 8.50 euros per hour - the traffic light coalition increased the lower wage limit for the first time by law. The minimum wage rose from 10.45 euros to 12 euros in October 2022. But when the SPD campaigned for it in the 2021 federal election campaign, nobody suspected the price jumps that would follow, mainly as a result of the Russian war in Ukraine. And that's not the end of it: Consumer prices in February, like in January, were 8.7 percent above the level of the same month last year. Therefore, the social association VdK is now demanding a minimum wage of 14 euros. "Only then will it be possible to compensate for the high energy prices and inflation," said VdK President Verena Bentele of the German Press Agency. The head of the Social Association Germany, Michaela Engelmeier, even told the newspapers of the Funke media group: "According to our calculations, the minimum wage would have to rise to 14.13 euros." It is conceivable "that the minimum wage will be gradually raised to this value," said the association in a statement available to the dpa.

DGB wants to compensate vigorously

The German Trade Union Confederation (DGB) does not name a number - but admits: "Yes, inflation is eating up the last minimum wage increase to a large extent," as DGB board member Stefan Körzell told the German Press Agency. "We will work in the Minimum Wage Commission for a strong compensation." Low earners in particular suffered from price increases. Körzell also refers to the EU: Their new minimum wage directive prescribes decisive consideration of purchasing power. SPD MP Sebastian Roloff also said: "We must continue to give relief to those who are most affected by inflation." The increase in the minimum wage would be effective for this, according to the SPD-left to the "Handelsblatt". The President of the German Institute for Economic Research (DIW), Marcel Fratzscher, had already demanded in the newspaper that politicians had to think about raising the minimum wage again.

Employers on the alert

Alarm bells are ringing for Germany's employers. "The recently raised demands to screw the adjustment to unrealistic heights proves to be a repeated attempt to attack the autonomy of collective bargaining," said the chief executive of their association BDA, Steffen Kampeter, the dpa. "The forthcoming adjustment of the minimum wage must never again be misused for political intervention." Last year, the BDA vehemently protested against the legislator raising the lower wage limit. Normally, representatives of employers and employees as well as the scientific community negotiate about it - in the Minimum Wage Commission. The relevant associations had until this Friday to send their statements to the committee. That got the new debate rolling in the first place.

Scholz clarifies procedures

Chancellor Scholz promptly spoke up. "It's very good that we raised the minimum wage to 12 euros last October," he said after a top-level discussion of German business in Munich. "Clearly associated with that statement was the promise that this was a one-time increase created by law." And that there will then be a return to the regular increase mechanism - i.e. to the Commission. Kampeter (BDA) and Körzell (DGB) also meet here directly. The left-wing social expert Susanne Ferschl complained that the committee was advising "alone in the quiet little room". According to the law, the committee must take the development of collectively agreed wages as the central benchmark for the deliberations – including how much Verdi is getting out of public service under increased warning strike pressure. But the Commission must also ensure that minimum wages that are too high do not endanger employment - and that minimum wages that are too low do not miss the required minimum protection for employees.

Effect against inflation decreases

But how well does the minimum wage work against inflation? Pretty neat - so far. This is how a new study by the institute WSI of the union-affiliated Hans-Böckler-Foundation can be summarized. Only about every second EU country was able to compensate for the high inflation last year with higher minimum wages - Germany too "comparatively well". Between the beginning of 2022 and the beginning of 2023, people on the minimum wage would have received 12.4 percent higher hourly wages, adjusted for inflation. "Since the next minimum wage adjustment is not planned until January 2024, part of the growth will be eaten up by the persistently high inflation this year," the researchers said. In France, the Netherlands and Belgium, on the other hand, the wage limit will also rise in 2023.