German Federal Minimum Wage to Increase by 4% in 2017

German Employees subject to the federal minimum wage are going to notice a significant increase in their hourly wages. The hourly minimum wage will rise from the current level of EUR 8.50 to EUR 8.84 as of 1 January 2017. This increase is equivalent to a 4% wage increase.

The decision to raise the hourly wage was made unanimously by the Federal Minimum Wage Commission, consisting of the chair of the commission, three representatives each of unions and employers and two scientists who are advisory members. When the federal minimum wage came into effect on 1 January 2015, the commission, which is supposed to decide independently from political influence, was instructed to set the minimum wage for two-year periods.

Its decision is based on the tariff index that represents the average increase of tariff-bound hourly wages. Based solely on this increase of 3.2%, the minimum wage would have increased to EUR 8.77; the additional increase represents the commission’s discretion. By increasing the minimum wage to EUR 8.84, the commission did not follow the unions’ request to consider the recent tariff increases for metal and electrics workers, as such consideration would have led to a higher increase.

While social associations state that the increase is too low, both unions and employers were quoted in newspapers that they approved the increase. At the time of the introduction of the minimum wage, employers in certain regions and industries warned that mass discharges were to follow.

Refusal to pay the minimum wage is a criminal offence – in order to avoid such charges, employers have to record every single working hour of their employees likely to receive wages close to the mandatory minimum