German government approves minimum wage increase

Germany’s cabinet on Wednesday approved an increase in the minimum wage to 12 euros ($13.60) an hour, a key campaign promise from Chancellor Olaf Scholz’s Social Democrats.

“Many citizens of our country work hard but earn little – that needs to change,” Scholz said as he announced the decision on Twitter. “For me, this is one of the most important laws and a matter of respect,” he said.

The minimum wage will increase to 10.45 euros per hour against 9.82 euros on July 1 and then to 12 euros on October 1. The increase will raise the wages of around 6.2 million workers in Germany.

The change will particularly benefit people working in catering, service professions, warehouse logistics and cleaners, according to Labor Minister Hubertus Heil.

“We’re talking about people who have been running the store during the pandemic,” he said.

The increase in the minimum wage was included in the coalition contract concluded between the Social Democrats (SPD), the Greens and the Liberals of the FDP after the September elections.

The German Confederation of Trade Unions (DGB) said the change would boost purchasing power in Europe’s biggest economy by around €4.8 billion a year.

But critics say it could fuel inflation, which had already soared to almost 5% in Germany by the end of 2021.

Joachim Rukwied, chairman of the German Farmers’ Association (DBV), told the Rheinische Post newspaper on Wednesday that the hike “would probably have a significant effect on food prices”.

James R. Rhodes