German commission recommends raising minimum wage to $17.11
Germany is set to gradually raise its hourly minimum wage to 14.60 euros ($17.11) by 2027 from the current 12.82 euros under proposals from a government-appointed commission, less than the ruling coalition had initially agreed to target.
Raising the minimum wage can make it harder for companies to take on staff as higher labour costs may force businesses to cut jobs or reduce hours. This risk is especially high for small firms and low-skilled workers, potentially leading to higher unemployment.
Initially, the minimum wage is to rise to 13.90 euros at the beginning of 2026.
The proposal of the commission, a body comprising employers and trade union representatives, must be implemented by the labour ministry.
Germany's Labour Minister Baerbel Bas welcomed the agreement, which "shows that social partnership in this country works," and asked the government to make this adjustment legally binding as of January 1, 2026.
Under the changes, the euro zone's largest economy would see full-time workers on minimum wage typically earn close to 2,500 euros a month by 2027.
The country would then have the second-highest minimum wage in the European Union behind Luxembourg, which mandates a monthly minimum of 2,638 euros, Eurostat data from 2025 show.
Three other EU countries have a national minimum wage above 2,000 euros per month - Belgium, the Netherlands and Ireland.
In the coalition deal signed by the conservatives and Social Democrats (SPD) raising the minimum wage to 15 euros an hour in 2026 was framed as something "achievable", and was pushed by the SPD in the talks, but it appears that target will not be reached even by 2027.
"In the long term, the minimum wage must provide protection against poverty and keep pace with overall wage developments," said Dagmar Schmidt, deputy chairwoman of the SPD parliamentary group at the Bundestag, welcoming the proposal while recognising that it fell short of what the SPD had hoped for.
UNEMPLOYMENT ON THE RISE
The commission's proposals come at a challenging moment for Germany after two years of economic contraction, when the weakness is taking its toll with a lag on the labour market and the number of unemployed people approaches the 3 million mark for the first time in a decade.
"After years of economic stagnation, which has already left visible marks on the labour market, the time is likely over when minimum wage increases passed the labour market more or less without a trace," said Hagen Lesch, a labour expert at IW, an economic institute that promotes free enterprise, competition and open markets.
Companies in Germany are growing more cautious in their personnel planning, the Ifo employment barometer showed on Friday before the minimum wage announcement.
"Despite an improved mood in the economy, the labour market has not yet achieved the turnaround," said Klaus Wohlrabe, head of surveys at Ifo. "There is still a lack of orders for new staff to be hired." Jobs data show the number of unemployed people has risen by nearly a third since 2022, especially in helper occupations, which are mostly affected by the minimum wage.
"A minimum wage of 14.60 euros threatens to exacerbate this development and could particularly push low-skilled workers out of the labour market," DMB president Marc S. Tenbieg said. ($1 = 0.8535 euros)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Arabian Post
2 hours ago
- Arabian Post
Kenya Dominates East Africa–Europe Trade Surge
Trade between the European Union and the East African Community reached €7.7 billion in 2024, marking a robust surge in economic engagement. Data from the EAC Secretariat and the European Commission reveal that Kenya led this growth, accounting for 43 per cent of total EAC trade with Europe. Kenya's ascent to prominence has been propelled by its position as the region's primary link to European markets. Under the Economic Partnership Agreement initiated in July 2024, it became the first EAC member to implement the pact, which offers immediate tariff- and quota-free access for its exports into the EU, while Kenya gradually opens its market. The results are distinctly visible: Kenya accounts for nearly half of all EAC–EU trade and for 45 per cent of investments within the bloc. An analysis of trade flows underlines the shift. In 2023, Kenyan exports to Europe—including cut flowers, fruits and vegetables—totalled €1.2 billion, while EU exports of mineral and chemical products, machinery and appliances to Kenya reached €1.7 billion. This balance reflects the mutual benefits of the agreement and deepening bilateral ties. Kenya ranks as the EU's seventh‑largest African trade partner, with total trade climbing to €3 billion in 2023, a 16 per cent rise since 2018. ADVERTISEMENT Beyond Kenya, the broader EAC has also seen shifts. Collective trade grew 28.4 per cent to $8.86 billion, driven largely by the Kenya–EU EPA. Within the EAC, intra-bloc trade also grew by 13.1 per cent to $12.1 billion in 2023, representing 15 per cent of total EAC trade. Country-specific performance underscores varying trajectories. Uganda registered a remarkable 77 per cent surge in exports to global markets, reaching $6.34 billion in 2023. Tanzania and Rwanda, while showing moderate gains, still lagged behind Kenya's growth pattern. Burundi, South Sudan and Rwanda, classified as Least Developed Countries, continue to rely on the EU's Everything-but-Arms scheme, which offers duty-free entry for all goods except arms. The EPA's emphasis on sustainability and inclusivity adds a strategic layer to the agreement. It includes clauses on environmental conservation, labour rights and gender equality—portions unprecedented in prior EU agreements with developing economies. EU officials have indicated that Kenya's stability and regional influence underpinned its leading role in the EPA, which is intended to serve as a model for other EAC members. Trade analysts suggest that Kenya's rise reflects both domestic reforms and stronger supply-chain integration. Kenyan firms have adapted to the EAC's Common External Tariff and aligned export capacities with EU demand, particularly in horticulture and floriculture. According to agricultural sector experts, Kenyan producers have expanded certification and quality compliance to meet EU standards, enabling higher-priced access to premium markets. Nonetheless, challenges persist. Kenya continues to record a trade deficit with the EU—approximately €500 million in 2023—raising concerns about long-term sustainability. While exports of flowers, tea and vegetables are strong, reliance on imports of machinery and chemicals remains substantial. Furthermore, other EAC partners have yet to ratify the EPA, delaying full regional integration under the agreement. Policy experts argue that widening Kenya's success across the EAC will require infrastructure upgrades, logistical harmonisation and expanded value‑addition processes. They caution that without broader regional participation, Kenya could be left exposed to external market volatility and uneven benefits. European trade officials maintain that the Kenya–EAC partnership is central to the EU's Africa policy, dovetailing with commitments on democratic governance and green growth. The EU‑Kenya EPA, integrated into a broader strategic dialogue launched in June 2021, represents the most ambitious EU trade pact with a developing country to date. Kenya's achievement as the dominant node of East African trade with Europe reflects a blend of diplomatic foresight, institutional readiness and export agility. As the agreement matures and other EAC nations contemplate accession, the potential for a reconfigured regional economic landscape grows—but so do the complexities of harmonising economic strategies across six sovereign states.
Gulf Today
5 hours ago
- Gulf Today
Europe placates Trump with Nato vows
In their rush to retain Donald Trump's support for Nato, the alliance's European members have promised to more than double the amount of wealth they set aside for military spending. The snag is that most can ill-afford to spend 5% of output on defence — so while there will be some unpalatable sacrifices in national budgets, there will also be some creative accounting to divert existing spending to the effort, reported Reuters. 'They will not get there,' Guntram Wolff, senior fellow of the Bruegel think-tank, said of the 5% goal. 'If you are a highly indebted country you can't issue more debt, it means very difficult budgetary choices,' he said of the hefty tax hikes or spending cuts that it would require. As a piece of political theatre, the Hague summit at least won over its intended audience: Trump himself. Amid concerns about his commitment to Nato's mutual defence clause, he said the United States stood with its European allies 'all the way'. While few dispute that Europe needs to do more to ensure its own security as tensions with Russia rise, the fixation on the 5% target cut short a separate debate about how it could be using its existing military budgets more efficiently, for example with national governments agreeing on joint procurement. Now it has saddled itself with pledges which — with the notable exception of Germany, whose finances are solid after years of fiscal frugality — most members will find hard to keep, Reuters reported. To hit the 5% threshold, European Union countries, whose debt pile already tops 80% of output, would between them have to nearly triple the 325 billion euros ($377 billion) they spent on defence last year to more than 900 billion. Non-EU Britain — whose debt is 100% of output and which already pays more in debt servicing than for every spending item apart from health — would need an extra 30 billion pounds ($41 billion). 'The potential losers are not just future generations saddled with huge debts, but today's societies,' said Nick Witney at the European Council on Foreign Relations. 'Disgruntled populations, whose sense of economic wellbeing has never recovered from the global economic crash of 2008, will likely become even easier prey for populist or nationalist politicians gathering strength across Europe.' To be sure, the closer a country sits next to Russia, the less domestic angst there is about finding the extra cash - Poland, the Baltics and Finland are all cases in point. Years of rivalry with neighbouring Turkey have meanwhile attuned Greek public opinion to accept higher defence spending. But Spain's Socialist Prime Minister Pedro Sanchez — whose country is alone in not expressly signing up to the new target — voiced the concerns of others when he said the goal was 'incompatible with our welfare state'. Slovakia, one of the central European countries whose budgets face the greatest strains from the defence build-up, has also baulked at the target, arguing that raising living standards and cutting its borrowing were equally important. Bruegel's Wolff said it remained to be seen whether countries increase their defence quotas by shaving the odd billion here and there off other areas, or whether big-ticket areas such as pensions take a sizeable hit. 'But keep it in proportion — there will still be a welfare state but perhaps less generous,' he said of social protections across Europe that can account for anything up to 30% of the economy. As leaders depart the Hague summit venue, the national conversations on defence will sound strikingly different to those that were had in the run-up to the gathering.
Middle East Eye
9 hours ago
- Middle East Eye
German Chancellor Merz calls on Iran to 'come to the negotiating table'
German Chancellor Friedrich Merz has called on Iran to return to negotiations to prevent increased escalation in a joint press conference with Austrian Chancellor Christian Stocker. 'Cooperation with the International Atomic Energy Agency (IAEA) should be continued, not terminated,' he said on Friday. Speaking a day after a Brussels summit that convened EU leaders to discuss pressing issues, Stocker also reiterated a call for Israel to allow more humanitarian aid into Gaza.
