The German government has cleared the path for a phased increase in the minimum wage, a decision sparking debate over its adequacy and the compromise that shaped its final form. The Federal Cabinet, meeting in Berlin on Wednesday, approved a plan to raise the minimum wage to €13.90 per hour starting January 1, 2026, followed by a further increase to €14.60 an hour the subsequent year. This represents a significant rise from the current rate of €12.82.
The decision follows a unanimous recommendation from the Minimum Wage Commission, a body comprised of both employer and employee representatives. However, the approved figure falls considerably short of the initially demanded €15 per hour, revealing a political tug-of-war behind the seemingly straightforward policy move.
While framed as a consensus-driven solution, the compromise primarily reflects a softening of demands from the Social Democratic Party (SPD), a core governing coalition partner. Political analysts suggest the SPD yielded to pressure from business lobbies and concerns about the potential impact on smaller companies, effectively diluting a core goal of their platform.
The decision immediately draws criticism from labor unions and left-leaning political groups who argue the increase is insufficient to address rising living costs and income inequality. They contend that a more substantial rise to €15 per hour would have provided a more tangible benefit to low-wage workers and acted as a more robust countermeasure against economic pressures.
Furthermore, questions are being raised about the long-term implications of this incremental approach. Critics warn that a series of smaller increases could create uncertainty for businesses and potentially undermine the intended effect of boosting the purchasing power of low-wage earners. The approved policy, while representing an advance, highlights the persistent challenges in balancing economic realities with the urgent demands for fairer wages and social justice within Germany’s political landscape.