Minimum wage to rise to 14.60 euros - Labour Minister Bas welcomes agreement

Stefan Körzell doesn't want to talk about it being a bitter pill he had to swallow. That's also illegal in Germany, the DGB executive board responds when asked about the Minimum Wage Commission's findings. And for those who aren't satisfied with the reference to species protection, he adds that from the employee perspective, the agreement doesn't even feel like a bitter pill to swallow.

Körzell, who sat alongside BDA General Manager Steffen Kampeter and Minimum Wage Commission Chair Christiane Schönefeld at the federal press conference this Friday, has been through tough negotiations. And the agreement on a compromise.

The statutory minimum wage is to increase to €14.60 in two steps. An increase to €13.90 per hour is planned for January 1, 2026, and a year later, it will be €14.60. This represents an increase of 13.9 percent compared to the current minimum wage, which is currently €12.82 per hour.

Based on an overall assessment, the Commission concluded that the approved increases were suitable for "further developing minimum protection for employees while at the same time being sustainable for companies in the current difficult economic situation," Schönefeld said. She emphasized that the Commission faced a particular challenge this year given the stagnating economy and uncertain forecasts.

And yet the committee, consisting of three employee representatives, three employer representatives, two academic advisors, and the chairperson, reached an agreement – ​​unanimously. This in itself is a success, considering that the union side was outvoted at the last meeting two years ago. The subsequent statutory increase in the minimum wage angered some in the business community.

In the catering industry, an increase in the minimum wage has noticeable consequences.

Source: Sina Schuldt/dpa

This is probably one of the reasons why many expressed relief after the announcement on Friday. "The Commission has sent an important signal: It is capable of acting and autonomous; it has not bowed to political pressure and has accepted responsibility," Michael Hüther, director of the employer-friendly German Economic Institute (IW), told the RedaktionsNetzwerk Deutschland (RND). He also warned that the increase is now a bet on positive labor market developments in the future.

At the press conference, Steffen Kampeter also emphasized the difficult conditions in global politics and the global economy and pointed to the uncertainties in the labor market. The BDA Executive Director also criticized the fact that the greatest difficulty this time was the "enormous political and media pressure."

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Kampeter is referring to a passage in the coalition agreement. "For the further development of the minimum wage, the Minimum Wage Commission will, as part of an overall assessment, base its decisions on both collective bargaining developments and 60 percent of the gross median wage of full-time employees," write the CDU/CSU and SPD. "In this way, a minimum wage of €15 is achievable by 2026."

SPD leader Lars Klingbeil offered an interpretation of this in the spring: "The minimum wage will rise to the €15 we want in 2026," he said. Friedrich Merz (CDU) tempered this statement when he emphasized in April that there was no automatic guarantee that the statutory minimum wage would rise to €15 next year. The debate was on.

It was fueled by repeated calls for the federal government to intervene if the Commission failed to agree on a minimum wage of 15 euros. This was one of the reasons why, shortly before the decision, associations and economists issued a barrage of warnings to stay out of the political process of setting the minimum wage.

Federal Labor Minister Bärbel Bas (SPD) emphasized on Friday that she expressly welcomed the joint result. "It shows that the social partnership in this country works," she said. It is now up to the minister to translate the resolution into a legal regulation. She announced that she will now initiate this process.

Depending on the calculation, the minimum wage increase is likely to affect approximately 5 to 6 million people. The president of the social association VdK, Verena Bentele, believes the increase is too small. "A minimum wage of €14.60 per hour is too low," she told RND. "Employees on the minimum wage truly deserve a decision for an immediate increase to €15."

The German Hotel and Restaurant Association (DEHOGA) sees things quite differently. "With today's decision, the Minimum Wage Commission has demonstrated its ability to reach compromises while taking collective bargaining developments and the overall economic situation into account," said President Guido Zöllick. However, he emphasized that the associated rising personnel costs pose major challenges for the industry, which employs 2.2 million people.

The negotiators also faced major challenges, wrangling until the last minute to reach an agreement. The compromise was reached at 9:10 a.m., says Körzell—50 minutes before the press conference began. His counterpart, Kampeter, seconded: "You could call it a perfect landing."