The Cabinet approves raising the minimum wage to 14.60 euros - what does this mean for employees
The German cabinet has approved a significant increase in the national minimum wage, the largest increase since its introduction ten years ago. Starting from January 2026, the minimum wage will rise from the current €12.82 to €13.90 per hour, and then to €14.60 in 2027. This decision, supported by the coalition government of CDU/CSU and SPD, aims to help workers cope with rising living costs, although economists warn that it is still below what is needed to ensure financial security.
Business associations have strongly criticized this decision. Oliver Zander, president of the Gesamtmetall union, stated that raising the wage to 15 euros would lead to "serious economic damage" during what he described as the longest economic crisis since the establishment of the Federal Republic of Germany. However, trade unionists and most economists believe that the increase is insufficient. Their position is based on the EU directive on minimum wages issued in 2022, which Germany approved under then-Minister of Labor Hubertus Heil (from the Social Democratic Party SPD). This directive obliges member states to ensure that full-time workers receive a wage of at least 60% of the average wage in the country, ensuring them a "decent life."
According to calculations by the Cologne Institute for Economic Research (IW Köln), the average net monthly wage for full-time employees in Germany is around 2750 euros. 60% of this amount is about 1650 euros per month. When converting this figure to an hourly wage, it becomes clear that a fair minimum wage should range between 14 and 15 euros per hour. The German Trade Union Confederation (DGB) estimated that 14.80 euros is the amount needed to meet EU standards, taking into account inflation and other factors. Therefore, the government plan barely approaches this level.
Experts warn that the new wage does not provide sufficient protection for workers against poverty after retirement. Even with a minimum of 15 euros per hour, a worker who contributes to the pension system for 45 years will receive a total pension of about 1170 euros, or about 1043 euros after taxes – which is well below the poverty line set at 1380 euros per month. To secure an adequate retirement income, the minimum wage must rise to at least 19.24 euros, or even 20.59 euros according to 2025 data.
Despite these results, most observers believe that such a significant increase in wages is politically unrealistic at this time. Even leftist politicians and social organizations acknowledge that reaching a minimum of 20 euros is difficult to achieve. As a result, it is likely that the state will continue to use tax revenues to support low-income individuals and protect them from poverty. This debate raises a fundamental question for German society: to what extent should companies bear the responsibility of protecting workers from poverty through wages, and what role should the state play through social support?