Minimum wage decision approaching: Is the 15 euro mark imminent?

Minimum wage decision approaching: Is the 15 euro mark imminent?

The negotiations of the Minimum Wage Commission in Germany are reaching a critical point these days. A result should be presented by June 30, 2025 that will determine the level of the German minimum wage for the next two years. The current minimum wage is 12.82 euros per hour, and the German Social Association is calling for an increase to 15.12 euros. The SPD is pursuing the goal of raising the minimum wage to at least 15 euros by 2026, in accordance with EU guidelines that set a low wage of 60% of median income.

Meanwhile, employers are warning about the possible economic consequences of a drastic increase to 15 euros. They fear that this could have a negative impact on employment in Germany. The German Federation of Trade Unions (DGB) is even calling for a minimum wage of 15.27 euros for 2026. The discussion about the level of the minimum wage is therefore accompanied by intense political tensions within the coalition, which are to be expected depending on the outcome of the commission. The Union parties have already rejected a political minimum wage.

Expectations and forecasts

According to reports from the Hans Böckler Foundation, the increase in the minimum wage is expected to be higher than the previous adjustment to around 14 euros, which would be expected under the previous adjustment mode. Researchers at WSI and IMK have found that a minimum wage of around 15 euros is necessary to achieve the target of 60% of the median wage for full-time employees. Forecasts for 2026 are between 14.88 and 15.02 euros, while for 2027 values ​​between 15.31 and 15.48 euros are expected.

In the future, the minimum wage increase will not only be based on collective bargaining trends, but will also be based on the desired target value. This decision was already made in January 2023 by the commission members appointed by trade unions and employers. The new two-stage adjustment procedure should include a regular adjustment based on tariff developments as well as an additional component to close the gap to the target value.

Historical perspective and influence of the minimum wage

In recent years, Germany has not adhered to international standards with regard to the minimum wage, as the reference value of 60% of the median wage was regularly undercut. OECD calculations show that a minimum wage of 15.12 euros is necessary this year in order to secure the purchasing power of employees. The increase to the current rate of 12.82 euros was decided in 2023 against the votes of the unions.

The introduction of the minimum wage has had positive effects in the lower wage segment, as wage inequality has been reduced and more and more mini-jobs have been converted into employment relationships subject to social security contributions. Although there were fears of job losses in advance, these largely did not occur, apart from low-paid jobs. It also showed that the minimum wage had no negative effects on collective bargaining or the level of organization of unions and employers' associations.

The chairwoman of the Minimum Wage Commission, Christiane Schönefeld, has not yet commented on the current status of the negotiations. Your goal is to reach an amicable decision in order to avoid having to make another decision. However, the Commission's final decisions were not consensual, which further complicates negotiations.

It remains to be seen whether the Commission will fully take the EU requirements into account. The political and economic tensions leading up to the decision could have far-reaching consequences for the wage structure in Germany.

More information from South German newspaper and Hans Böckler Foundation.