Economists disagree
Social association calls for a minimum wage of more than 14 euros
06/25/2023, 12:04 p.m
After politics, it’s the turn of the social partners again: the minimum wage commission will present its proposal for an increase on Monday. The social association VdK hopes for at least 14 euros, but there is no consensus among economic experts.
The social association VdK calls for a significant increase in the statutory minimum wage from currently 12 euros to at least 14 euros. “Inflation, which is still over six percent, is already eating up the last minimum wage increase from October 2022,” said VdK President Verena Bentele. “A minimum wage of at least 14 euros helps curb income poverty.”
The Minimum Wage Commission, made up of employer and employee representatives, intends to present its proposal for the new level of the statutory minimum wage in Berlin on Monday. According to a study by the Federal Statistical Office, the last increase affected 5.8 million or every seventh employee in Germany. Bentele called on the Minimum Wage Commission to be big and not messy: “We expect the Minimum Wage Commission to introduce a poverty-proof wage for the lowest income groups.”
The Commission wants to work out the corresponding recommendation this Sunday. In previous years she had recommended a multi-stage increase. The decision is not binding for the federal government, but the recommendations have always been implemented by decree of the Federal Ministry of Labor. The commission, made up of three representatives each from trade unions and employers, two consulting scientists and chairwoman Christiane Schönefeld, is facing delicate deliberations. According to the law, the decision should be based on the development of collectively agreed wages for “reasonable minimum protection”, but also keep an eye on securing employment.
Economists also disagree
Never since the introduction of the statutory minimum wage in 2015 have inflation rates been as high as in 2022 and 2023. At the same time, given the sluggish economy, some sectors could find themselves overwhelmed by a significant increase. The minimum wage was last increased from 10.45 euros to 12.00 euros on October 1, 2022. The increase had been ordered by law. The traffic light of the SPD, Greens and FDP had agreed on this in the 2021 coalition negotiations. The Commission was passed over at the time. She had last proposed a recommendation for a four-stage increase up to 10.45 euros three years ago. Actually, it should decide every two years on adjustments to the amount of the minimum wage.
Economic experts also disagree on how large the increase should be this time. The Munich Ifo Institute has pleaded for restraint. In principle, the Minimum Wage Commission has the task of basing its recommendation for the increase on how collective wages are developing overall, said Ifo President Clemens Fuest of the Funke media group. “In the first quarter of 2023, collective wages were almost three percent higher than a year earlier, and the increase could be slightly higher by October. The point of this rule is that the minimum wages should follow the general collective wages, but should not determine wage development.”
Marcel Fratzscher, President of the German Institute for Economic Research, however, said that an increase in the minimum wage to 14 euros would have positive effects on the economy as a whole. “Because it would support the purchasing power of many people and thus also stimulate demand and contribute to the economic upswing,” he said. According to the chairwoman of the Social Association Germany, Michaela Engelmeier, the minimum wage would have to be increased to at least 14.13 euros in order to compensate for inflation. The left parliamentary group leader Amira Mohamed Ali called for an increase to at least 13.53 euros.