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Minimum wage increase: What you need to know about the 2022 law in Germany

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Minimum wage increase

According to the draft law, the statutory minimum wage in Germany is to be adjusted to 12 euros as early as October 1, 2022.

Minimum wage increase: The statutory minimum wage in Germany was raised from 9.60 euros to 9.82 euros on January 1, 2022 – this is what the Third Minimum Wage Adjustment Ordinance provided for. On July 1, it will rise to EUR 10.45 and on October 1, 2022, it is to be raised to EUR 12 according to a draft law by the federal government.

The minimum wage increase in Germany in 2022

The statutory minimum wage increased in accordance with the Third Minimum Wage Adjustment Ordinance on January 1, 2022. It was raised in the third stage from EUR 9.60 to EUR 9.82. 

In the fourth stage, it is planned to adjust the minimum wage to 10.45 euros on July 1, 2022. However, this adjustment will probably only be short-lived: As promised by the SPD and the Greens before the election, the minimum wage is to be raised to 12 euros as early as October 1, 2022. The Minimum Wage Commission is then to decide again on future increases.

Minimum wage increase: in four stages by July 2022

Until the statutory increase to 12 euros on October 1, 2022, the Third Minimum Wage Adjustment Ordinance passed by the Federal Cabinet on October 28, 2020 will still apply. The cabinet thus implemented the Minimum Wage Commission’s proposal. On June 30, 2020, the independent Minimum Wage Commission responsible for setting the minimum wage unanimously decided to increase the minimum wage in four stages:

StartingMinimum wage per hour (gross)
01.07.20219.60 euros
01.01.20229.82 euros
01.07.202210.45 euros
01.10.202212.00 euros

When determining the amount of the statutory minimum wage, the Minimum Wage Commission orientated itself towards the collective bargaining development of the recent past and took into account current economic forecasts as well as the current employment and competition situation.

Statutory minimum wage of 9.82 euros from January 2022

The statutory minimum wage was introduced on January 1, 2015 at a gross amount of EUR 8.50 per hour and amounted to EUR 9.60 at the end of 2021. On January 1, 2022, it was raised to EUR 9.82.

The Minimum Wage Commission, which is to make decisions free of political influence, sets the amount every two years. In addition to the chairman, the committee consists of three representatives each from the trade unions and employers, as well as two advisory scientists. The proposal of the Minimum Wage Commission is then made binding by the government by ordinance.

Minimum wage brings no competitive disadvantages

The statutory minimum wage applies to all adult employees – except for long-term unemployed after starting work in the first six months. It also does not apply to trainees, people with compulsory internships or internships of less than three months. In addition, there are collectively agreed minimum wages in several sectors that are above the statutory lower-wage limit.

The increase in the minimum wage is intended to contribute to fair and functioning competitive conditions by setting a wage floor to counteract cut-throat competition through the lowest wages. For companies that employ workers with wages at the minimum wage level, a higher statutory minimum wage means rising wages and thus production costs. However, previous experience with the minimum wage shows that companies have largely succeeded in adapting to the higher level of wage costs and that this has not had any fundamentally disadvantageous effects on the overall economic competitive situation.

Are minimum wage changes in Germany coming?

According to Federal Labor Minister Hubertus Heil, the increase in the minimum wage did not go fast enough in the last legislative period. He planned to introduce an additional criterion for determining the minimum wage. To quickly achieve a minimum wage of 12 euros, the Minimum Wage Commission should be based on the average wage in Germany from 2022 and not solely on past collective wage developments. Ultimately, there was no change in the law. The EU Commission is also currently developing a legal framework for European minimum wages and has recommended that it should be based on the average wages in the respective EU country.

Statutory minimum wage in Germany increase on October 1, 2022

The coalition agreement of the new German government provides for an increase in the minimum wage to 12 euros. This was one of the election promises made by the SPD and the Greens. A corresponding draft law from the Federal Ministry of Labor and Social Affairs is now available. The minimum wage is then to be increased to 12 euros in a one-time step on October 1, 2022. At the same time, the mini-job with its previously applicable 450-euro limit is to be adjusted to the minimum wage. This will make it a 520-euro job. (Read more about this: Mini job wage increase in Germany (from 450-euro to 520-euro per month in 2022) – A demand for fairness! )

Statutory minimum wage: Difference to industry minimum wage

The minimum wage regulates the absolute lower-wage limit in Germany. However, in some industries and companies, employers are required to pay an even higher hourly rate. For example, if they are tied to an industry minimum wage that was agreed based on the Collective Bargaining Act or the Posting of Workers Act. As a rule, such are negotiated between trade unions and individual employers or employers’ associations.

Important here: The collective bargaining wage must not be below the statutory minimum wage and is usually only mandatory for the collective bargaining partners involved. Like the minimum wage, the collective wage also represents a lower wage limit. It is therefore quite possible that employers pay their employees more than the remuneration set in the collective agreement.

If there is a special public interest, the parties to the collective agreement can apply for general binding force. If the Federal Ministry of Labor and Social Affairs (BMAS) agrees, the collective agreement is binding for all employers and employees within the material and geographical scope of the collective agreement. On its website, the Federal Ministry of Labor and Social Affairs keeps a list of collective agreements that have been declared to be generally binding.

Exceptions to the statutory lower wage limit

In principle, the statutory minimum wage applies to all employees over the age of 18, including, for example, pensioners, mini-jobbers, foreign employees, seasonal workers, employees posted to Germany and schoolchildren of legal age. However, the Minimum Wage Act (MiLoG) also provides for exceptions. The following groups of people and professions are not entitled to a minimum wage:

  • Trainees (a minimum training allowance has been required here since January 1, 2020 )
  • volunteers
  • Adolescents under the age of 18 who have not completed vocational training
  • Long-term unemployed in the first six months of employment
  • self-employed
  • Homeworkers under the Homework Act
  • Individuals doing voluntary service
  • Persons who complete a compulsory internship (legal for schools, universities, training regulations, legally regulated vocational academies).
  • Persons who complete a voluntary internship of up to three months (interruptions such as vacation or illness can be added) as orientation for vocational training or for taking up studies or alongside vocational or university training, if they have not previously completed such an internship with the same trainer duration. You can use the click path on the BMAS website to find out whether an internship is remunerated with the minimum wage
  • Persons in the context of a recruitment qualification (§ 54 a SGB III) or vocational training preparation according to the Vocational Training Act
  • Participants in a job promotion measure (e.g. 1-euro jobs)
  • People with disabilities in an “employee-like legal relationship”

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