Minimum wage is increasing: 14.60 euros from 2027 - what does that mean for employees?

Minimum wage is increasing: 14.60 euros from 2027 - what does that mean for employees?

Schönefeld, Deutschland - In Germany, the minimum wage will be significantly increased in the coming years. The minimum wage commission has decided that the statutory minimum wage, which is currently at 12.82 euros per hour, should increase in two steps to 14.60 euros. The first increase to 13.90 euros is planned for January 1, 2026, followed by a further increase to 14.60 euros on January 1, 2027. This corresponds to an increase of 13.9 percent that will support an estimated 5 to 6 million employees in industries such as trade, catering, logistics and cleaning. This agreement was unanimously achieved among the representatives of the employees, employers and science, as rnd reports.

Federal Minister of Labor Bärbel BAS welcomed the result of these negotiations. "This is the largest social wage increase since the introduction of the minimum wage," she said. In addition, she announced that she was putting the decision into a legal ordinance promptly. Michael Hüther, director of the Institute of German Economy (IW), also praised the Commission's ability to act, but warned of the risks associated with this increase. Challenges from a stagnating economy and uncertain economic forecasts were also addressed.

The role of the minimum wage commission

But how is the minimum wage actually defined? The minimum wage commission, which was launched in 2015, checks the amount of the minimum wage every two years and evaluates its effects on the employee protection and competitive conditions. This is done taking into account the collective bargaining. Their members, who work on a voluntary basis, are made up of six voting representatives of the social partners and two advisory scientists. In a "compromise with a sense of proportion", the Commission has formulated a procedure for both employees and for companies, such as ZDF explained.

However, there are also critical voices. Verena Bentele, President of the VDK, described the raising as "too small". In addition, Guido Zöllick, President of Dehoga, expressed concern about the increased personnel costs that could burden the gastronomy. Marcel Fratzscher from the German Institute for Economic Research emphasized that the decision not to increase the minimum wage to 15 euros was a missed chance. He argues that a higher minimum wage would increase productivity and make the labor market more attractive.

economic views and challenges

The agreement on the minimum wage takes place against the background of a current economic weakness. The German economy sees itself under pressure through the current gross domestic product (GDP): this recorded a minus in 2023 and 2024. Ulrich Kater, chief economist of Deka Bank, warns that the increase in the minimum wage could potentially heat inflation, since other wage groups could also increase their wages. An economic upswing remains crucial for the ability of companies to carry the higher wages.

Overall, it can be said that this agreement represents a step in the right direction. Nevertheless, the critics' concerns are not unfounded. The coming months will show how powerful these adjustments will affect the labor market and the economy as a whole.