By the end of the year: Increase the minimum wage for mini-jobs to €12

September 26, 2022 /

Already decided in June, the minimum wage will now be increased for the second time in a year on October 1, 2022. After the minimum wage was regularly increased to €10.45 on July 1, it will now be adjusted to €12 gross. For many employees, this means a noticeably higher income at the end of the year. Politicians hope that this will be an effective measure against inflation with higher purchasing power for consumers. At the same time, the minimum wage threshold has also risen to €520 per month.

Pro: That's why the minimum wage is needed

The German Trade Union Confederation (DGB) welcomes the increase in the minimum wage to 12 euros and cites several reasons on its website as to why the increase is necessary. Specifically, it states that a full-time employee in Germany must be able to live well on their salary, and that the current minimum wage is not enough to live on due to rising prices. For a pension level above the basic security level, it would even need €12.63.

The IMK Policy Brief No. 116 from January 2022 attests that the increase in the minimum wage will only have a minor impact on inflation based on simulation calculations. According to the researchers, the effect of the minimum wage increase will peak in spring 2023. Here, the inflation rate is only 0.25 percentage points higher than without the adjusted minimum wage. Furthermore, no negative employment effects can be expected, while the income situation of millions of employees will improve.

Contra: Minimum wage increase with headwinds

However, this step does not go far enough for the opposition. Gesine Lötzsch, budget policy spokesperson for the Left Party, warned that the current exponential rise in prices poses an existential threat to many households and that the minimum wage should therefore be set at €13.

Employers’ president Rainer Dulger described the plans as a “gross violation of collective bargaining autonomy” and announced that he would have the federal government’s actions legally reviewed. The employers’ association BDA also accused the coalition of not adhering to agreements, as this time the minimum wage increase was not decided by the commission of employers and trade unions.

Minimum wage: Legal basis

The Minimum Wage Act (MiLoG) came into force on 16.08.2014 and has been in force since 01.01.2015. The minimum wage is defined as the “lowest legally permissible remuneration” and is generally differentiated according to the form of payment: By hourly rate or as a monthly wage.

In principle, the laws on the minimum wage can be found primarily in the Minimum Wage Act (MiLoG); if this is adjusted, this is done by the Minimum Wage Adjustment Ordinances, most recently on November 9, 2020. An exception is the increase to 12 euros, which is regulated in the “Act to Increase Protection by the Statutory Minimum Wage and on Changes in the Area of Marginal Employment of June 30, 2022”.

As a rule, an independent commission of the collective bargaining partners discusses the level of the minimum wage. The criteria, such as appropriate minimum protection for all employees or fair competitive conditions, are also stipulated by the Minimum Wage Act. It is only possible for the federal government to adopt the proposal on the level of the minimum wage; there is no provision for it to make its own proposal.

The following are exempt from the minimum wage

Young people under the age of 18 without completed vocational training
Apprentices
Interns, in the case of a compulsory internship as part of school or university education or in the case of a voluntary internship lasting less than three months
Volunteers

Sources:
Minimum wage rises to twelve euros (lto.de; last accessed on 26.09.2022)
Minimum wage increase to 12 euros hardly affects inflation (boeckler.de; last accessed on 26.09.2022)
Statutory minimum wage rises to 12 euros from 1. October 2022 to 12 euros (bmas.de; last accessed on 24.09.2022)
12 euro minimum wage: All arguments at a glance (dgb.de; last accessed on 24.09.2022)
Current minimum wage (bmas.de; last accessed on 26.09.2022)

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