How to get more money

The minimum wage in Germany is set to rise to 9.19 euros in 2019 and become effective on 1 January 2011. January 2020 to 9.35 euros per hour. For around three million people, this means more pay.

The so-called minimum wage commission agreed on the proposal. It is based on the development of collectively agreed wages and pays attention to the minimum protection of employees, fair competitive conditions, as well as the major goal of not jeopardizing employment. There is a certain amount of leeway as to what exactly is included in the calculation.

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► German Labor Minister Hubertus Heil (45, SPD) has welcomed the proposal for a two-stage increase in the minimum wage in 2019 and 2020. There will be a jump to 9.35 euros per hour, which corresponds to an increase of about 5.8 percent, said the SPD politician in Berlin on Tuesday.

"I think this is a real increase." It reflects the economic development and collective agreements reached.

Do I automatically get the new minimum wage??

The statutory minimum wage applies to all employees of legal age – except for the long-term unemployed after they have taken up work in the first six months.

It also does not apply to trainees, people on compulsory internships or internships lasting less than three months. In addition, several industries have minimum wages that are above the minimum wage floor.

Prof. Dr. Arnd Diringer, head of the research center for labor law at the Ludwigsburg University of Applied Sciences, told BILD: "The adjustment is every two years and usually takes place on 1. January, i.e. in this case as of 1. January 2019. Ultimately, the adjustment is automatic – those who are paid according to minimum wage also get the increase automatically."

► Diringer points out a special feature: "The important thing is that if I currently have pay that is above the minimum wage, and after the minimum wage increase my pay is below the newly set amount, then I automatically have a right to the increase in my pay. Again, it’s an automatism, a legal requirement that employers must implement. If the boss does not comply with the legal requirements, the legal claim can be enforced at any time. If in doubt, just ask the boss."

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Reactions and expert assessments

Ifo professor Gabriel Felbermayr welcomes the increase in the minimum wage in response to a BILD inquiry.

► "We have record employment, historically low unemployment, and what is now the eighth consecutive year of economic growth. Nevertheless, wages in Germany are rising only very slowly. There is something wrong with the German wage-setting process. One consequence is the huge export surplus, which is increasingly turning out to be a mortgage. The higher minimum wage will pull the whole wage distribution up a bit. That is exactly right in the current situation."

At the same time, the expert warns: "Minimum wages are dangerous instruments. Because they prevent wages from being adjusted downward when things aren’t going so well anymore. Then they produce unemployment. The more they are raised, the more problematic they will be in the next economic crisis. This can be observed very well in French economic history, for example."

Professor Holger Bonin, Research Director at the Institute for the Future of Work, agrees with him: "Risks exist if the economy collapses or the minimum wage rises too quickly."

Overall, Bonin sees advantages and disadvantages: "There are winners and losers: some have more money in their pockets today, others have a harder time finding a new job. Also, the workload has increased in some areas."

Bonin sees room for improvement in the calculation of the minimum wageInstead of focusing solely on the development of the average collectively agreed wage, it would make sense to take greater account of the development of productivity and job opportunities in the low-wage segment."

Looking back on the introduction of the minimum wage, Felbermayr notes: "The nationwide minimum wage was not enacted until 1.1.Introduced in 2015. So far, the experience hasn’t been bad, but the real stress test will come in the next recession. A few things can already be said: the purchasing power of low income groups has increased, negative employment effects can hardly be proven, the inequality of labor income has fallen as a result of the minimum wage."

Meanwhile, not everyone is happy with the Commission’s current proposal.

"Employees are not getting a sufficient share of the rising prosperity"

Economist Peter Bofinger tells BILD: "The increase from January 2019 of just under 4 percent compared to January 2017 is likely to increase the purchasing power of minimum wage workers only slightly, taking into account the price trend. The increase of just over 1.7 percent from January 2020 is expected to be less than the rate of inflation. As a result, minimum wage workers do not participate sufficiently in the general increase in prosperity."

In addition, Bofinger emphasizes: "Previous experience with the minimum wage shows that it initially tended to be set too low. That was also good. Now it would have been quite appropriate to raise the minimum wage significantly more strongly."

For Bofinger, the minimum wage is not a job breaker: "We have about 2.3 million additional regular jobs since the introduction of the minimum wage in January 2015, unemployment has fallen by about half a million. So the fears that the minimum wage will cost jobs, which is completely unfounded."

The social association VdK also demands a significantly higher amount.

"Companies must finally give their employees a share in the economic recovery," VdK president Verena Bentele told the German Press Agency.

When considering the level of the minimum wage, it must be ensured that full-time employees can provide for their livelihood and build up an adequate old-age provision above the basic security level.

The VdK president: "We need a minimum wage that is above twelve euros in order to combat poverty effectively."

The introduction of a minimum wage was a controversial core concern of the SPD in the old grand coalition. Representatives of business and economics had warned of the loss of many jobs. This has not happened so far. A few million workers will benefit from the minimum wage.

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