The increase in the minimum wage, the electoral promise of the coalition between Greens and Liberals, led by the Social Democrat Olaf Scholz, was voted by the German Parliament on Friday June 3. “Security and peace are the priorities of the government in these difficult times”underlined before the Bundestag the Minister of Labor Hubertus Heil, considering that this revaluation was a “question of respect” and contributed to the workers’ sense of security.
This measure will improve the remuneration of nearly 6.2 million employees out of an active population of 45.2 million people. The German hourly minimum wage will be increased in two stages, from €9.82 to €10.45 on July 1 and then to €12 on October 1, boosting overall purchasing power by €4.8 billion within Europe’s leading economy.
Concern among business leaders
This news is welcomed by the unions at a time when purchasing power is being eroded by inflation that has been setting records for nearly a year. In May, the rise in prices reached 7.9% over the last twelve months.
According to a survey by the employers’ organization ” Family business “ Among 800 of its members, 89% of business leaders fear that this measure will increase their costs and therefore in fine prices, with a further acceleration of inflation. Certain sectors, already strongly affected by the rise in the price of raw materials, are worried about their competitiveness, such as the agricultural sector which will have to pay more for seasonal workers.
However, the risk is put into perspective by some experts. “Reasonable wage increases are (…) necessary to stabilize the economy, even in this time of crisis”commented the president of the influential economic institute DIW, Marcel Fraztscher.
Unions want to go further
The unions are calling for further increases to follow the rise in prices, especially as many branch negotiations are currently being held. The 12,000 employees in the textile industry in the east of the country thus obtained a 5.6% wage increase in early May.
In the steel industry, several thousand employees have gone on strike in recent days to demand an 8.2% increase in wages. For the vast branch of industry which notably includes machine tools, automobiles and electronics, the discussions will take place at the beginning of the autumn.
Germany introduced the minimum wage in 2015, after passionate debates on this principle, which breaks with the tariff autonomy of the branches.