Cabinet introduces minimum wage of twelve euros

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From October, the statutory minimum wage in Germany will be twelve euros.

(Photo: dpa)

Berlin The federal government has initiated an increase in the statutory minimum wage to twelve euros on October 1st and higher earnings limits for mini-jobs. The cabinet approved a corresponding proposal by Labor Minister Hubertus Heil (SPD) on Wednesday.

“A poverty-proof minimum wage is a question of performance justice and respect for honest work,” said the minister. More than six million hard-working people, mostly in East Germany and especially women, benefited from the increase.

The Confederation of German Trade Unions (DGB) also praised the cabinet decision, but criticized the raising of the mini-job limit and the waiver of the stricter recording requirements for working hours originally provided for in the draft law. Employer President Rainer Dulger criticized the “change in the system from a minimum wage development shaped by collective bargaining to a state wage development”, which has severely disturbed the trusting cooperation of the past few years in the Minimum Wage Commission.

At the urging of the SPD and the Greens, the minimum wage is to be raised to twelve euros in October. Initially, it will rise in July from the current EUR 9.82 to EUR 10.45. this step had been decided by the independent Minimum Wage Commission, which was made up of employer and employee representatives.

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This announced on Wednesday that it would not present the regular report planned for June on the effects of the minimum wage. The next evaluation report will not be available until June 2023. According to the draft law, the committee should then decide on the next adjustment of the lower wage limit with effect from January 2024.

“The evaluation report primarily serves as a basis and as part of an overall assessment for the adoption of a resolution on the adjustment of the statutory minimum wage,” said the chairman of the minimum wage commission, Jan Zilius. From the point of view of the committee, there is therefore no need for a regular report in June 2022.

The Confederation of German Employers’ Associations (BDA) sees the political decision to raise the minimum wage as a devaluation of the work of the Commission and an attack on collective bargaining autonomy. She hopes that in the parliamentary process, transitional periods for existing collective agreements or a later date for the increase can be enforced.

With the draft law passed by the cabinet, the federal government also wants to raise the previous earnings limit for mini jobs from 450 euros by 70 euros. The FDP had pushed this through in the coalition negotiations. From October, monthly earnings of up to 520 euros will remain tax and social security-free for employees. In addition, the mini-job limit will be dynamic, so it will increase with future increases in the lower wage limit.

DGB board member Anja Piel called this a big mistake. The chance for a fundamental reform had been missed. “Many millions of employees are therefore still not covered by the protection of statutory social security.”

According to the draft law, around 6.2 million employees can expect a salary increase as a result of the higher minimum wage. Employers are therefore faced with additional costs of around 5.6 billion euros per year for which social security contributions are incurred. Additional income of 2.2 billion euros is therefore expected for social insurance.

Minister of Labor Heil had originally planned to use the mini-job reform to enforce stricter documentation of working hours in eleven sectors covered by the Act to Combat Clandestine Employment. The coalition has moved away from this again under pressure from the Liberals.

More: Minimum Wage Act: Employers expect changes – but initially refrain from filing a lawsuit

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