Minimum Wage Soaring to 15 Euros: Business Owners Warn of Economic Doomsday Scenario
Businesses finance "economic advancement" for their workers
Employers in the Minimum Wage Commission are resisting the push for a rise in the minimum wage to 15 euros by the year 2026. "The figure of 15 euros is rooted in wage populism and lacks any rational basis," argued Steffen Kampeter, head honcho of the Federal Association of German Employers' Associations (BDA), in a chat with the "Frankfurter Allgemeine Zeitung". He went on to brand the 15 euros figure as a "dire economic Hail Mary" if implemented in 2026.
"It's only a matter of time before we witness further hikes in the minimum wage, but 15 euros isn't feasible in the immediate future," Kampeter added. Since January, the minimum wage has stood at 12.82 euros per hour.
Kampeter also lashed out at "severe negative structural consequences" brought about by the minimum wage in the service industry sector, pointing out that a overinflated minimum wage is driving entire regions of vegetable farming abroad, effectively killing off domestic self-sufficiency for vital staple foods. Moreover, he argued that the minimum wage is fast approaching a level that reshapes the entire wage structure, with this wage pressure seeping into jobs in the manufacturing sector and causing service prices to skyrocket.
The BDA boss expressed his dissatisfaction with Labor Minister Barbara Bas' recent calls for an increase to 15 euros per hour, stating that the commission works independently of government orders and that threats from the cabinet are inappropriate for a federal government. "I demand a great deal of respect from the new federal labor minister and no interference in the Minimum Wage Commission's work," Kampeter concluded.
The Minimum Wage Commission, consisting of employer and union representatives, is set to make its final decision on wage increases for the 2026 and 2027 fiscal years by the end of June. Bas had urged the commission earlier in the month to take the minimum wage to 15 euros per hour by 2026, or else face government intervention. The Minimum Wage Act stipulates that the commission should base its wage increases on the rise in collectively agreed wages; however, data from the Federal Statistical Office implies that this would only warrant an increase of around 14 euros.
Kampeter cautioned that the law requires the commission to make a prudent assessment in view of the current economic circumstances. "In light of the economic data, I can't fathom justifying a massive wage hike of 17% to 15 euros," he said, advocating for a more restrained approach instead of chasing unattainable goals.
Sources:- ntv.de- lme
Related Topics:- Confederation of German Employers' Associations- Minimum Wage- Bärbel Bas- Employees- Trade Unions
Extra Insights:
- Economic Impact and Debate: There is an ongoing debate about the potential economic implications of increasing the minimum wage to 15 euros per hour in Germany. Some argue that it could lead to job losses and increased business costs, while others argue that it is necessary for maintaining fairness and competitiveness in today's economy.
- Government and Coalition Agreement: The German government's coalition agreement emphasizes the importance of ensuring a living wage for workers, with the goal of reaching a minimum wage of 15 euros per hour by 2026. Different political parties have varying opinions on the feasibility and desirability of achieving this objective.
- General Economic Context: The German government's broader economic policies, including tax reforms and investment incentives, aim to support economic growth and stability while implementing a higher minimum wage. Policymakers are considering the overall economic impact of such measures in their decision-making processes.
In light of the economic data, it's challenging to justify a 17% wage hike to 15 euros for many businesses, given the potential detrimental impact on job creation and overall economic stability. To ensure a sustainable society, theMinimum Wage Commission should explore vocational training programs that can help empower both employers and employees, thus promoting financial sustainability in the long run.
