Germany Raises Minimum Wage: New Per-Hour Rate Announced

Germany has announced a two-step increase in its hourly minimum wage, set to reach €14.60 per hour by 2027. The first adjustment will take effect at the beginning of 2026, raising the wage from the current €12.82 to €13.90 per hour. This decision follows recommendations from a government commission comprising both employer and trade union representatives, aiming to improve earnings for low-income workers.

The wage hike is expected to benefit up to 6.6 million employees, according to the Federal Statistics Office, providing a boost to household incomes and helping to address cost-of-living pressures. Proponents argue that higher wages will strengthen domestic demand and contribute to social equity.

However, critics have expressed concerns that the increase in labor costs could impact employment, particularly for small and medium-sized enterprises. They warn that companies may face challenges in hiring and retaining staff as operational expenses rise, potentially slowing economic recovery.

Germany’s labor market is already under pressure following two years of economic contraction. Unemployment reached 3 million in August, the highest in a decade, though it decreased slightly in September. While the new minimum wage represents a significant rise, it still falls short of the €15 per hour target initially proposed by Chancellor Friedrich Merz’s conservative party and their coalition partners in the Social Democrats (SPD).

The phased increase reflects the government’s attempt to balance the need for fair wages with economic stability, aiming to provide relief to workers while minimizing disruption to businesses in a challenging economic environment.