This had been a central promise of Social Democrat Olaf Scholz since December. Despite the context of galloping inflation, the German Chancellor’s measure was adopted. From Saturday October 1, the minimum hourly wage will be increased to 12 euros gross, approved theth German Parliament on Friday 3 June.
“Security and peace are the priorities of the government in these difficult times”, Labor Minister Hubertus Heil told the Bundestag. He considers that this revaluation is a “matter of respect” and contributes to the workers’ feeling of safety. PAlmost 6.2 million employees out of an active population of 45.2 million people will see their remuneration increase.
Introduced in 2015, the German hourly minimum wage will be increased in two stages. First from 9.82 to 10.45 euros on Friday 1 July. Then from 10.45 to 12 euros on Saturday 1 October. The government hopes to boost the overall purchasing power of 4.8 billion euros in the largest European economy, according to the German Confederation of Trade Unions (DGB).
The measure is welcomed by the unions at a time when purchasing power is being eroded by inflation which has been setting records for almost a year. In May, the rise in prices reached 7.9%. Unions are calling for further increases to keep pace with rising prices, as prices rose 7.9% in May. In the steel industry, several thousand employees have gone on strike in recent days to demand an 8.2% increase in wages.
Business leaders are on the contrary critical. According to a survey by the Familienunternehmen employers’ organization of 800 of its members, 89% of business leaders fear that this measure will increase their costs and therefore ultimately 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. VSHowever, the risk is put into perspective by some experts.