Plans set for minimum-wage increase

IMPACT – MEDIUM

What is the change? Germany is preparing to increase its minimum wage from the current €8.84 per hour to €9.19 per hour.

What does the change mean? The minimum wage applies to all workers in Germany, including foreign workers, though EU Blue Card holders are subject to higher wage minimums. Employers should set their budgets accordingly.

• Implementation time frame: Ongoing. The new wage rate will likely be implemented Jan. 1, 2019.
• Visas/permits affected: German companies, including those employing foreign workers.
• Business impact: Businesses may see a slight increase in labor costs.
• Next steps: Chancellor Angela Merkel’s government is expected to adopt the new wage minimum after Germany’s Minimum Wage Commission recommended the increase.

Background: Germany first instituted a minimum wage law in 2015 and increased the wage last year from €8.50 per hour to the current €8.84. The wage commission recommended the increase after taking a number of factors into account, including the average wage increase for workers in Germany. Besides recommending that the minimum wage increase to €9.19 per hour next year, the commission also called for increasing it to €9.35 in 2020.

BAL Analysis: The proposed salary minimum would represent an increase of about €0.35 per hour that employers should factor in when planning their 2019 budgets.

This alert has been provided by the BAL Global Practice group. For additional information, please contact your BAL attorney.

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