Employers defend decision
With regard to the current decision, the general manager of the Confederation of German Employers’ Associations (BDA), Steffen Kampeter, expressed his regret that for the first time in the history of the Commission a decision was not reached by consensus. Otherwise, however, he defended the decision. This is “above what we introduced as a negotiating position in the negotiations,” said Kampeter in Berlin. We have lived up to our collective bargaining, state and economic policy responsibilities. The proposal is said to have been calculated from the 10 euros 45 – the last proposal by the Commission – and not the valid 12 euros. This makes the climb appear higher.
The DGB speaks of a “revenge”
The German Trade Union Confederation (DGB), which considers the increase to be too small and therefore does not support it, was outvoted in the commission. DGB commission member Stefan Körzell accused the employers of never having made their peace with the minimum wage increase to 12 euros passed by the traffic light coalition last October and of bringing their current proposal into play as revenge. He accused them of wanting to save on the financially weakest in a situation with the highest inflation rates.
Kampeter rejected this criticism. The legal mandate of the minimum wage commission is well balanced and not a “repair shop for socio-political or inflationary developments”.
NGG: “Ignores the reality of life”
The union Food-Genuss-Gaststätten (NGG) also sharply criticized the Commission’s proposal: “This fatal decision completely ignores the reality of life of millions of people and does not fit in with the times,” said the NGG national chairman Guido Zeitler in Hamburg. It is a shame that the employers’ camp in the Minimum Wage Commission mercilessly pushed through their own agenda. “In this way they contribute to the division of society and also do the companies a disservice: A sharp increase in the minimum wage would have been an urgently needed cash injection for flagging consumption,” emphasized Zeitler.
The Minister of Labor refers to the legal situation
Federal Labor Minister Hubertus Heil wants to implement the Commission’s recommendation despite this criticism. “I know that the workers and the unions would have liked a higher minimum wage,” he said in Berlin. But he referred to the minimum wage law. Accordingly, the federal government can only implement the Commission’s proposal or not. The alternative would be no increase in the minimum wage as of January 1, “which is irresponsible in view of the inflation trend”.
According to the Minimum Wage Act, the Commission’s proposal will only come into force after the Federal Government has enacted it. Normally it is a matter of form, how the matter will be handled this time against the background of the ambiguous voting result, but initially seemed open, also because Heil himself had recently called for a sharp increase in the minimum wage. “It was important to me that the minimum wage increases, that it develops and that will happen,” he said of the Commission’s decision.
EU directive sets new facts
The issue of the minimum wage is now also on the agenda in Brussels. The European Union does not want to impose the same minimum wage in all member states, since the purchasing power alone is very different. In a guideline, Brussels relies on the so-called median wage – i.e. the wage that lies exactly in the middle between the highest and lowest income of employees in a respective country. The minimum wage should reach at least 60 percent of the median wage. For Germany, that would currently correspond to a statutory minimum wage of around 14 euros. Germany actually has to implement this EU directive by the end of 2024.
Does the proposal create “social problems”?
Several economists were critical of the Commission’s recommendation. “While wages in other income groups are expected to make up for a noticeable proportion of the lost purchasing power over the next year and a half, the income of minimum wage earners is now lagging behind,” said Sabastian Duliien from the institute for macroeconomics and business cycle research (IMK), which is close to the trade union: “The result is creating social problems, violates the mandate of the Commission and endangers the social consensus on the German minimum wage institutions.”
ING chief economist Carsten Brzeski described the increases as “very moderate”. “The sharp rise in inflation is hitting lower income groups in particular,” said Brzeski. “Therefore, a further increase in the minimum wage is still justified.” However, it is not enough to compensate for the increased cost of living.
The chief economist for Germany at Deutsche Bank, Stefan Schneider, said, on the other hand, that calls for substantial increases are understandable, but that “in view of the gloomy economy, they have “probably worsened the employment opportunities for minimum wage earners”. In addition, the recent significant increase in the minimum wage has contributed to the acceleration of inflation in the service sector.
With information from epd, Reuters and dpa