Germany’s statutory minimum wage will rise from €12.82 to €13.90 per hour on January 1. According to a survey, many businesses perceive the increase as a significant burden. Some 37% of the companies surveyed said they would be "directly affected" by the minimum wage hike, the Munich-based Ifo Institute reported on Tuesday. Many of these companies plan to cut jobs, reduce investments, and raise prices as a result.
Among the affected companies, more than one in five (22%) plan to reduce staff due to the increase. Half of the companies intend to raise prices, and 28% expect to invest less.
The minimum wage is particularly common in the hospitality sector, with 77% of companies in the industry reporting they are affected by the hike. Retail is also heavily impacted, with 71% of companies affected. In industry, the textile and clothing sector (62%) and the food sector (59%) frequently pay the minimum wage. The construction industry is largely unaffected because a higher sector-specific minimum wage already applies there.
"The reactions of companies show that raising the minimum wage in the current phase of economic weakness is particularly harmful," said Ifo researcher Sebastian Link. He added that the effects of the 2022 minimum wage increase had been expected to be much smaller. The survey was conducted in October as part of the Ifo business survey and included around 4,600 companies.
The independent Minimum Wage Commission recommended the wage increase in June, and the Cabinet implemented it by regulation. According to the Federal Ministry of Labour, around six million employees will benefit from the increase. The step followed a heated political debate, with the SPD and CDU/CSU coalition stating in their coalition agreement that "a minimum wage of €15 by 2026 is achievable."
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