Minimum Wage Debate Heats Up: Employers Slam "Risky" 15 Euro Demand
Companies are financing "financial advancement" for their workers.
Germany's employers are throwing cold water on the Social Democratic Party's (SPD) proposed minimum wage hike to 15 euros by 2026. Steffen Kampeter, CEO of the Federal Association of German Employers' Associations (BDA), blasted the figure as "ungrounded" and "far-fetched."
In the Frankfurt Allgemeine Zeitung, Kampeter branded the proposed increase an "economic Hail Mary" with no solid basis. The 15 euro figure, he argued, is a recipe for disaster if Linked to 2026.
"Eventually, we will see additional minimum wage increases beyond what appears unreachable today," Kampeter told the newspaper. "But hitting 15 euros in the short term isn't feasible." Since January, the minimum wage has stood at 12.82 euros per hour.
Economic Ramifications
Employer representatives also raise alarms over potential structural damage to the economy. Kampeter explains that excessive minimum wages cripple wage-intensive service sectors, causing them to migrate overseas. Such an action could lead to decreased self-sufficiency in important food staples.
At the same time, the minimum wage is edging closer to a rate that tilts labor market wages upward and increases pressure on jobs in the industrial sector, eventually driving up costs for services.
Perceived Lack of Imagination
During a spat with Labor Minister Barbara Bas, who advocated for a 15 euro minimum wage increase, Kampeter drew criticism for his "lack of imagination." Bas had threatened legislative intervention if the commission failed to heed her call for a wage increase.
In the face of these demands, Kampeter insisted that the commission operates independently, and threats from the cabinet are inappropriate. "I expect respect from the new federal labor minister and no interference in the work of the Minimum Wage Commission," he asserted.
Economy Expert Opinion: Economists have warned of the growth of the black market under a higher minimum wage, with controversial figures such as a 15 euro minimum wage potentially exacerbating the issue. Moreover, a significant increase might strain established collective bargaining structures during economic fragility.
Employers' Counter Points:
- Collective Bargaining Structure Preservation: Pushing the minimum wage higher could strain collective bargaining structures in times of economic vulnerability. Jörg Dittrich, President of the Central Association of German Crafts, urges decision-making on the minimum wage to be delegated to a body consisting of employers, employees, and academics, rather than politically dictated.
- Economic Consequences: Oliver Zander, leader of Gesamtmetall employers' association, cautions of possible economic consequences such as inflation, price increases, and potential business closures, particularly in Eastern Germany. Zander also notes that the proposed increase would represent a 76% surge in a decade, far outstripping the growth of collectively negotiated wages.
- Minimum Wage Politicization: Employers contend that the SPD's politicization of the minimum wage raises concerns about wage uniformity in the labor market. Rather than being governed by political agendas, decisions regarding the minimum wage should hinge on economic factors.
Source: ntv.de, lme
Confederation of German Employers' Associations Minimum Wage Bärbel Bas Employees Trade Unions
- The Confederation of German Employers' Associations suggests that future decisions on the minimum wage should be delegated to a collective body, including employers, employees, and academics, to preserve the existing collective bargaining structure.
- Vocational training programs could be funded through the finance available from savings made on spending related to housing additional workers due to the minimum wage increase, as a part of a business strategy that balances economic growth and fair labor practices.