Minimum wage reduces wage gap in Germany

Minimum wage reduces wage gap in Germany

According to the Federal Statistical Office, the increased minimum wage has reduced the income gap between low and top earners in Germany. In the period from April 2022 to April 2023, the wage gap between the two groups decreased. The increase in the minimum wage from 9.82 euros to 12 euros was a decisive factor in this development. Before this increase, high earners had earned 3.27 times the income of low earners in 2018, which had increased to 3.28 times in spring 2022. But a year later, this value had fallen to 2.98 times, which is a significant change.

The income groups are defined by the Federal Statistical Office based on the top and bottom ten percent of the wage scale. In April 2023, the average gross earnings of the lower group was 12.25 euros, while the upper group was 36.48 euros. The increase in wages for low earners averaged 12.4 percent, while there was only an increase of 1.9 percent for higher earners.

Although the wage gap has decreased in both western and eastern Germany, regional differences still exist. In April 2023, higher earners in the west of the country earned 3.04 times as much as the lower group, while in the east it was only 2.49 times. Future developments continue to show potential, as the statutory minimum wage rose again on January 1, 2024, this time to 12.41 euros. There is even discussion of raising the minimum wage to 15 euros in the future, which could help further reduce the income gap between low and top earners.