Minimum Wage in Germany: Impacts, Developments, and Perspectives
The minimum wage is a central topic in the German labor market and is the subject of controversial discussions. In this discussion, we explore how the minimum wage affects both employees and employers, what recent developments look like, and address some key questions surrounding this topic.
What Is the Minimum Wage in Germany?
The general statutory minimum wage in Germany is the legally required hourly wage that employers must pay their employees at a minimum. The Minimum Wage Act provides the legal framework for this. Its purpose is to ensure that employees receive an income that covers their cost of living. Regular adjustments are made by an independent commission. Additionally, there are industry-specific minimum wages negotiated by labor unions and employers and outlined in collective labor agreements.
However, there are some exceptions where the minimum wage does not apply, including:
- Apprentices.
- Minors without completed vocational training.
- Long-term unemployed individuals during the first six months of employment.
- Volunteer workers.
- Interns in compulsory internships.
- Interns in voluntary internships of up to three months.
Development of the Minimum Wage
The minimum wage in Germany has evolved as follows since 2015: Starting at €8.50 per hour, it increased to €9.35 in approximately two-year intervals by 2020. In 2021, there were two adjustments: from €9.50 in January to €9.60 in July. In 2022, there were three adjustments: from €9.82 in January to €10.45 in July, and finally, to €12 in October. Consequently, within one year, we observed an increase of approximately 22 percent.
Minimum Wage in 2023: Is Another Increase Planned?
As of now, the minimum wage remains at €12 per hour since the increase in October 2022. This equates to a gross income of around €2,080 for a regular 40-hour workweek. Of course, factors such as tax class, marital status, and federal state impact the specific deductions and the resulting net income.
For the coming two years, the Minimum Wage Commission has set the following: An increase to €12.41 in January 2024 and an increase to €12.82 in January 2025. This means that the upcoming percentage increase over two years amounts to only 3.4 and 3.3 percent, respectively.
Is There a Minimum Wage for Mini-Jobs?
As previously mentioned, the minimum wage is a general statutory minimum wage, applicable regardless of how many hours someone works. Therefore, yes, the minimum wage applies to individuals with mini-jobs. In practice, this means that with an income threshold for mini-jobs of €520 and a €12 hourly wage, a person can work 43 hours per month — or 10 hours per week — in a mini-job.
Is There a Minimum Wage for Apprentices?
Apprentices are subject to the minimum training allowance. For the current year, 2023, the amounts are as follows:
- 1st year of apprenticeship: €620.
- 2nd year of apprenticeship: €731.60.
- 3rd year of apprenticeship: €837.
- 4th year of apprenticeship: €868.
Minimum Wage and Its Implication for Payroll
Payroll accounting is an essential component of corporate accounting that deals specifically with the management and processing of wages and salaries within a company. HRlab can assist and streamline the process through preparatory payroll accounting.
Importance of the Minimum Wage
A minimum wage ensures increasing living costs are taken into account, guaranteeing a minimum standard of living for workers. Adequate minimum wages provide a degree of financial security, allowing individuals to meet their basic needs and save for the future, thereby preventing poverty in later years. An adequate minimum wage also boosts purchasing power, benefiting the economy. Moreover, it creates fair working conditions and prevents underpayment.
Since the increase to €12 per hour, 5.8 million employees in Germany have seen an increase in their earnings, especially women and low-wage workers. The percentage of employees in low-wage sectors has decreased from 19 percent to 15.2 percent.
EU Comparison: Where Does Germany's Minimum Wage Stand?
Since the last increase to €12, Germany currently ranks second in the EU comparison, just behind Luxembourg with €13.05. Following Luxembourg, there are:
- The Netherlands with €11.26.
- France with €11.07.
- Ireland with €10.50.
- Belgium with €10.25. At the bottom of the list are Croatia, Latvia, and Bulgaria, with minimum wages ranging between €3.60 and €2.
Disclaimer
We would like to point out that our website provides non-binding information, which under no circumstances constitutes legal advice. This also, and especially, applies to topics within the sphere of legal HR advise. The content of this contribution cannot and is not intended to replace individual and binding legal advice. For this reason, all information provided is without guarantee of correctness and completeness, but always researched with the utmost care.