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Global Economy

Minimum wage rises to 12 euros: you need to know that

From October 1st, a minimum wage of 12 euros per hour will apply in Germany. Olaf Scholz mentioned in almost every campaign speech that he wants to raise the lower wage limit.

On Wednesday, the federal cabinet approved Labor Minister Hubertus Heil's draft law to increase the minimum wage from the current 9.82 euros per hour to 12 euros, thereby launching one of Chancellor Olaf Scholz's key campaign promises.

The new minimum wage applies to almost all employees. Up to 6.2 million employees should benefit from the increase. An adjustment to EUR 10.45 has already been decided for July 1, 2022. Three months later, the level of the lower wage limit is to be raised once outside of the usual increase steps. Normally, the minimum wage is essentially adjusted to the previous increase in collectively agreed wages in Germany.

The draft law justifies the increase with the support of purchasing power in Germany and with rising living and housing costs.

Minor employees, mini-jobbers, are then allowed to work fewer hours with a higher wage. Heil wants to raise the earnings limit for mini jobs at the same time. Also in October, it is set to increase from EUR 450 to EUR 520 per month.

These 6 EU countries do not have a statutory minimum wage

Even before the increase to 12 euros, Germany was one of the countries in the EU with a comparatively high minimum wage. The €9.82 per hour that has been in force since the beginning of the year corresponds to €1,621 gross per month for a full-time position. Higher minimum wages have so far been paid in Luxembourg (EUR 2,257), Ireland (EUR 1,775), the Netherlands (EUR 1,725) and Belgium (EUR 1,658). France is below this with 1,603 euros.

With the increase to 12 euros, Germany should rise to second place among the EU countries with the highest minimum wage behind Luxembourg. In Eastern European EU countries, the minimum wages are significantly lower at less than 750 euros gross per month. However, the cost of living there is also lower on average.

Six of the 27 EU countries, including some with above-average wage levels, do not have a statutory minimum wage: Denmark, Finland, Italy, Austria, Sweden and Cyprus.

Employer President Rainer Dulger criticized that politicians were breaking the promise that the Minimum Wage Commission would set the wage limit. In this body, employers and unions usually determine the increments. The trusting cooperation there is severely disturbed.

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