The minimum wage in Germany recently changed, which may have you wondering what the new laws are.
Like many countries in the EU, Germany has strict laws in place about how much employees should be paid for their work.
In this article, we will outline what the minimum wage is in this country, as well as what it used to be before the law changed.
We will also cover the sanction in place for employers who fail to pay the minimum wage to their workers.
What Is The Minimum Wage In Germany?
The minimum wage in Germany is governed by a special body known as the Mindestlohn Kommission (Minimum Wage Commission).
The most recent increase took effect in July 2022, raising the minimum wage from €9.82 to €10.45.
However, this is also set to change very soon and the commission has voted to raise the minimum wage again to €12.00 starting on the 1st of October 20220.
What Was The Minimum Wage Originally?
The Mindestlohn Kommission was initially set up in January 2015 by Angela Merkel’s third government.
This government was formed from a coalition of two parties including the Social Democratic Party (SPD) and the Christian Democratic Union (CDU).
The creation and enforcement of a minimum wage was one of the SPD’s main conditions for the formation of the coalition government.
As such, on the 1st of January 2015, for the first time in German history, workers across all sectors were guaranteed a minimum wage of €8.50.
Before this date, a minimum wage only existed in specific industries where unions had lobbied for one.
The 2015 law ensured that all workers in every sector of the economy were guaranteed to be paid a certain amount for their work.
When Was The Minimum Wage First Raised?
The first time the minimum wage was increased was exactly two years after it was first introduced.
On January 1st, 2017, the Mindestlohn Kommission successfully raised the minimum wage to €8.84.
Since then, there have been many more changes that have gradually led to the €12 minimum wage that will take effect in October 2022.
Does The Minimum Wage Apply To Everyone?
Just like other countries that have minimum wage laws, there are exceptions detailing workers that can legally be paid under this wage.
The most prominent exceptions are people under the age of 18, who fall into a different category of employee.
Freelancers, interns and other workers who are not officially part of their companies can also be paid less than the minimum wage without incurring sanctions.
Volunteers and people working as part of training programs are also not included by this law, and can be paid under the minimum wage.
One final exception is the long term unemployed.
Any worker, who has not been in active employment for the last year, can also be paid under the minimum wage for the first 6 months of their employment.
After this probationary period has lapsed, they may become entitled to a pay rise that brings their compensation into line with the statutory minimum wage.
What Are The Sanctions For Not Paying The Minimum Wage?
When it was first introduced, it was found that many businesses continued to pay their employees under the minimum wage.
At least 10% of student working jobs that were affected by this law were still being illegally underpaid.
To deal with employers who refused to comply with the new law, the Finanzkontrolle Schwarzarbeit (Tax Enforcement Unit for Undeclared Work) was made significantly larger.
This body began to oversee the implementation and enforcement of the minimum wage, imposing sanctions on employers who failed to observe the new rules.
It is recommended for workers to speak to their employers first if they believe they are being underpaid. This is so an equitable solution can be found before matters are taken further.
Failing this, employers may theoretically face fines of up to €500,000 if they do not pay their employees at least the national minimum wage.
Employees have up to three years to open a case for being underpaid. If they fail to do so within this time period, then they will not be eligible for compensation.
Who Is Allowed To Sit On The Mindestlohn Kommission?
The Mindestlohn Kommission is tasked with regularly proposing raises and other alterations to the minimum wage.
This commission is composed of nine members across different professions to provide a balanced perspective on the current economic climate.
The members include a single president, three representatives of the German workers, three representatives of German employers and two economists.
Of all these members, the two economists do not have voting privileges and are there to present an unbiased view for the other parties to discuss
What Is The Average Salary In Germany?
When compared to other European countries, Germany offers very good conditions for its workers.
Looking at statistics from the OECD database, over ¾ of the population aged between 15 and 64 are in gainful employment.
In total only 3.4% of Germans are completely unemployed which is exceptional when compared to other European nations.
According to data gathered by the German Statistical Office, the average salary for German workers was €3,771.
There was a significant gap in the average earnings for men and women, with men earning roughly €634 more than their female co-workers.
Generally the highest paid professions include, financial services, insurance companies, and consulting.
Meanwhile, legal professions, engineering jobs and utility workers all receive generally less than the aforementioned jobs but still earn over €65,000 a year on average.
We hope after reading this article that you now know everything you need to know about the German Minimum wage and how it works.
The minimum wage has had a significant impact on the lives of many German people, but this hasn’t stopped it causing some debate over the years.
Thankfully, the laws that enforce the minimum wage are here to stay, and it is only likely to keep increasing as time goes on.