The German Minimum Wage: Experiences and perspectives after one year

Since 1 January 2015 a statutory minimum wage of € 8.50 per hour applies in Germany. In 2014 between 4.8 and 5.4 million employees still earned a lower hourly wage. Even if it cannot yet be stated exactly how many employees benefitted from the introduction of the minimum wage, above-average wage increases in the classical low-wage sectors indicate significant effects of the introduction of the minimum wage. Even collective bargaining policies benefitted from the introduction of a minimum wage and contributed to the further increase of the lowest wage groups. The negative effects on the labour market that were predicted by many economists did not materialise. On the contrary, employment in Germany has seen a continuous increase. Merely the so-called 'mini jobs' (a special form of marginal part-time employment) show a strong decline, but many of these were transformed into regular jobs requiring social insurance. Against the background of these positive experiences, discussions are currently being held on the future adjustment of the minimum wage that is to come into effect at the beginning of 2017. Following the German Minimum Wage Act the Minimum Wage Commission - composed by employers and trade union representatives - has to give a recommendation by taking into account the recent developments of collectively agreed wages. According to the wage index of the Federal Statistical Office, collectively agreed wages increased by a total of about 5.5% in 2014 and 2015. Thus, the minimum wage would have to be increased to about € 9. Furthermore, it should be examined whether this level of the minimum wage actually guarantees "appropriate minimum protection for employees", as required by the Minimum Wage Act.