The Gesetz zur Regelung eines allgemeinen Mindestlohns (Minimum Wage Act) was enacted in Germany on January 1, 2015, establishing a universal minimum wage for the first time. Prior to this, Germany had only sectoral minimum wages. The initial minimum wage (MW) was set at €8.50 per hour. By establishing a floor for compensation, a minimum wageprotects vulnerable workers from exploitation and aims to guarantee decent livelihoods for all. It is especially important to ensure that the least wealthy individuals and professionals in industries where collective bargaining is not feasible are fairly paid. As a result, it improves the financial situation of workers in the bottom of the income distribution, particularly women, individuals with low-education attainment, immigrants, and other demographic groups that tend to be disproportionately affected by low wages. Therefore, the MW helps to close the gender pay gap and to equalize income distribution, promoting economic and social participation.
The Minimum Wage Commission (Mindestlohnkommission) is the independent body responsible for proposing minimum wage adjustments. It consists of a chairperson, three members from both employer and employee organizations, and two non-voting academic advisors. The commission is newly appointed every five years, and its proposals, which require a simple majority vote, are passed in June every two years. If a majority is not reached, the chairperson proposes a compromise and only votes if a majority remains elusive.
According to the Minimum Wage Act, the commission’s recommendations should be guided by the past development of collective bargaining wages, which is tracked by the Collective Wage Index of the Federal Statistical Office. The commission must also consider criteria such as ensuring adequate worker protection, fair competition, and not jeopardizing employment. The commission supports its decisions with a wide array of data and expert opinions from various external bodies and its own secretariat. The secretariat also provides information and advice to employees and companies.
Once the Minimum Wage Commission passes a resolution, the government drafts a Minimum Wage Adjustment Ordinance for the Federal Ministry of Labour and Social Affairs. After a three-week period for social partners and civil society organizations to submit opinions, the government can implement the proposed minimum wage adjustment without the consent of the Bundesrat[RC1] (the German legislative Federal Council). The government cannot change the amount proposed by the commission; it can only either implement the proposal or not. If the proposal is not implemented, the current minimum wage remains in effect[RC2] .
In addition to the statutory minimum, minimum wage standards in specific sectors can be declared generally binding through a ministerial ordinance, extending their application to employers who would not otherwise be bound by the collective agreement. The Minimum Wage Act defines that every worker has the right to be compensated with at least the minimum wage, with exceptions for apprentices and young workers in vocational training. As aforementioned, there are industry-specific minimum wages with wage levels above the statutory minimum wage negotiated by collective bargaining partners which the federal government declared to be generally binding in accordance with the Posting of Workers Act (AEntG), the Temporary Employment Act (AÜG), or the Collective Bargaining Agreement Act (TVG). There are generally binding agreements for all employers active in the following industries: Temporary employment, vocational training and further education services, roofing trade, electrical trade, meat industry, building cleaning, painting and varnishing crafts, nursing industry, chimney sweep craft.According to the Federal Statistical Office of Germany (Destatis), approximately 19% of employees in Germany in April 2022 were working in the low‑wage sector, defined as earning below €12.50 gross per hour. This equated to around 7.5 million jobs, down from 8.0 million in April 2018 — a reduction of about 514,000 low‑wage positions. As a result, the share of low‑wage employment dropped from 21% to 19% across all dependent jobs in that period. From these, approximately 3.7% earn a minimum wage of 12.41 euros (April 2024).
Not applicable.
The Minimum Wage Act introduced a nationwide minimum wage, which is monitored by a federal authority and customs authorities. In addition, it is possible to set sector-specific minimum wages at national or regional level. These sector-specific minimum wages must in any case comply with the general minimum wage.
Findings: Since its introduction on January 1, 2015, the statutory minimum wage has been increased multiple times based on the scheduled proposals of the Minimum Wage Commission, as well as a one-time unscheduled decision by the federal government. At €12 in January 2023, it was more than 40 percent above its introductory level of €8.50 per hour. This means the statutory minimum wage, until that moment, has risen nearly twice as much as the collective wage index, which the Minimum Wage Commission's proposals for the nominal wage are legally required to follow. More specifically, the minimum wage outpaced tariff wage growth by about 19.5 percentage points.
Additionally, unintended impacts should also be considered when evaluating the minimum wage. The effectiveness of the statutory minimum wage also critically depends on the higher wage level not leading to a reduction in companies' demand for labor. In a 2022 article published in the IAB-Forum, Erik-Benjamin Börschlein, Mario Bossler, and Nicole Gürtzgen concluded that the introduction and increase of the statutory minimum wage had barely reduced employment levels up to 2020. However, this finding cannot be easily generalized to the subsequent minimum wage increases to €10.45 and €12, as there is currently no empirical evidence available for them.
Niedriglohnsektor in Deutschland schrumpft seit 2017
Findings: At the lower end of the wage distribution, sector-specific minimum wages and the introduction of the general minimum wage in 2015 likely had a positive effect. Furthermore, trade unions were able to push through wage increases that often exceeded inflation. Over the entire observation period, real gross hourly wages grew by 16.5 percent to a recent average of around €20.30.
The low-income rate grew significantly from about 11 percent in the late 1990s to about 16 percent by 2015. Since then, available data sources for measuring the low-income rate show inconsistent results. For example, the most recent rate is 14.7 percent based on the German part of the European Union Statistics on Income and Living Conditions (EU-SILC), 16.7 percent using data from the microcensus, and as high as 17.6 percent according to SOEP. It's important to note that while different data sources may produce varying results in individual years, they show comparable findings over the long term.
Abstand zwischen Gering- und Besserverdienenden wird kleiner
Findings: The earnings gap between low-wage and high-wage earners in Germany narrowed between April 2022 and April 2023, following the sharp increase in the statutory minimum wage from €9.82 to €12.00 per hour in October 2022. The Federal Statistical Office (Destatis) reports that in April 2023, high-wage earners received 2.98 times the gross hourly earnings of low-wage earners, a decrease from 3.28 times in April 2022. At that time, a low-wage earner was defined as a person earning up to €12.25 per hour (the bottom 10% of the wage scale), while a high-wage earner earned €36.48 or more (the top 10%). The earnings gap had previously remained largely unchanged between April 2018 and April 2022.
The reduction in the earnings gap, or wage dispersion, is attributed to the fact that the earnings of the bottom 10% of earners increased by a significant 12.4% between April 2022 and April 2023. In contrast, the earnings of the top 10% grew by only 1.9%, and those in the middle of the wage scale increased by 4.3%. This substantial wage growth for low-wage earners is primarily a result of the statutory minimum wage being raised from €9.82 to €12 per hour during that period.
This trend was consistent across both West and East Germany. In both regions, the earnings gap between low-wage and high-wage earners narrowed because the gross hourly wages of low-wage earners increased much more (11.8% in the West and 15.3% in the East) than those of high-wage earners (1.8% in the West and 2.8% in the East). The median wage also rose, by 4.2% in the West and 6.1% in the East. This indicates that low-wage earners in both parts of the country benefited from the minimum wage increase. Previously, the earnings gap had slightly widened in the West between April 2018 and April 2022, while remaining stable in the East.
Despite this recent narrowing, the wage gap in April 2023 was still significantly wider in West Germany than in East Germany. In the West, high-wage earners received 3.04 times the gross hourly earnings of low-wage earners, whereas in the East, they earned 2.49 times as much. In April 2022, the gap was 3.34 in the West and 2.8 in the East.
The Minimum Wage Act was evaluated in 2020. The evaluation revealed potential for development: In a European comparison, the German minimum wage, measured as a percentage of the national median wage, was below average. Rising living costs, particularly housing costs, also called into question if the minimum wage was suitable for ensuring an adequate standard of living on the basis of a full-time job. In addition, a full-time job paid at the minimum wage was not sufficient to achieve a poverty-avoiding old-age pension. Therefore, the minimum wage was increased exceptionally by law to a gross hourly wage of 12 Euro as of 1 October 2022. The next adjustment decision was made the following year, 2023, again by the Minimum Wage Commission as required by law.
Additionally, compliance with Germany’s minimum wage law faces significant challenges. Many employers use loopholes or illegal practices—such as underreporting hours or misclassifying payments—to avoid paying the full wage. Estimates suggest that in 2018, up to 2.4 million workers entitled to the minimum wage were still paid less. Monitoring is limited, with only 55,000 employer inspections in 2019, and enforcement places a heavy administrative burden on firms. Overall, while the law improved wages, ensuring its proper implementation remains a major issue.
The data also suggest that some employers adjusted working hours in response to the sharp increase in the statutory minimum wage to €12.00 in October 2022, which may have dampened the effect on monthly earnings. Also, while no widespread employment losses were observed immediately after the increase, further research is required to evaluate potential longer-term impacts on employment structures, hours, and informal practices. Overall, the €12 increase served as a strong upward push in the low-wage sector, though its full implications are still unfolding.
Finally, The minimum wage hike in October 2022 led to a disproportionately strong increase in wages for low earners, significantly narrowing the wage gap between the top and bottom of the earnings distribution in both East and West Germany. The trend is a clear sign of compression in wage inequality driven by statutory intervention.
International Institutions
● ILO (International Labour Organization)
● OECD (Organisation for Economic Co-operation and Development)
● Eurofound (European Foundation for the Improvement of Living and Working Conditions)
● ETUI (European Trade Union Institute)
● ETUC (European Trade Union Confederation)
● SGI Europe (Social Employers and Services of General Interest)
National Institutions
● DGB (Confederation of German Trade Unions)
● BDA (Confederation of German Employers' Associations)
● Institute of Economic and Social Research (WSI)
● German Economic Institute (IW)
● Institute for Employment Research (IAB)
● Institute for Applied Economic Research (IAW)
● German Institute for Economic Research (DIW)
SDG 1 - End poverty in all its forms everywhere
● Target 1.1 - By 2030, eradicate extreme poverty for all people everywhere, currently measured as people living on less than $1.25 a day
○ Indicator 1.1.1 Proportion of population below the international poverty line, by sex, age, employment status and geographical location (urban/rural)
● Target 1.2 - By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions
○ Indicator 1.2.1 Proportion of population living below the national poverty line, by sex and age
○ Indicator 1.2.2 Proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions
SDG 2 - End hunger, achieve food security and improved nutrition and promote sustainable agriculture
● Target 2.1 - By 2030, end hunger and ensure access by all people, in particular the poor and people in vulnerable situations, including infants, to safe, nutritious and sufficient food all year round
○ Indicator 2.1.1 Prevalence of undernourishment
○ Indicator 2.1.2 Prevalence of moderate or severe food insecurity in the population, based on the Food Insecurity Experience Scale (FIES)
● Target 2.2 - By 2030, end all forms of malnutrition, including achieving, by 2025, the internationally agreed targets on stunting and wasting in children under 5 years of age, and address the nutritional needs of adolescent girls, pregnant and lactating women and older persons
○ Indicator 2.2.1 Prevalence of stunting (height for age <-2 standard deviation from the median of the World Health Organization (WHO) Child Growth Standards) among children under 5 years of age
○ Indicator 2.2.2 Prevalence of malnutrition (weight for height >+2 or <-2 standard deviation from the median of the WHO Child Growth Standards) among children under 5 years of age, by type (wasting and overweight)
SDG 5 - Achieve gender equality and empower all women and girls
● Target 5.1 - End all forms of discrimination against all women and girls everywhere.
○ Indicator 5.1.1 Whether or not legal frameworks are in place to promote, enforce and monitor equality and non-discrimination on the basis of sex.
SDG 8 - Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
● Target 8.5 - By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value
○ Indicator 8.5.1 - Average hourly earnings of employees, by sex, age, occupation and persons with disabilities
SDG 10 - Reduce inequality within and among countries
● Target 10.1 By 2030, progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average
○ Indicator 10.1.1 Growth rates of household expenditure or income per capita among the bottom 40 per cent of the population and the total population
● Target 10.2 By 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status
○ Indicator 10.2.1 Proportion of people living below 50 per cent of median income, by sex, age and persons with disabilities
● Target 10.4 Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality
○ Indicator 10.4.1 Labour share of GDP, comprising wages and social protection transfers
SDG 1 – End poverty in all its forms everywhere
● Target 1.1 – By 2030, eradicate extreme poverty for all people everywhere, currently measured as people living on less than $1.25 a day
○ Indicator 1.1.1 Proportion of population below the international poverty line, by sex, age, employment status and geographical location (urban/rural)
● Target 1.2 – By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions
○ Indicator 1.2.1 Proportion of population living below the national poverty line, by sex and age
○ Indicator 1.2.2 Proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions
SDG 2 – End hunger, achieve food security and improved nutrition and promote sustainable agriculture
● Target 2.1 – By 2030, end hunger and ensure access by all people, in particular the poor and people in vulnerable situations, including infants, to safe, nutritious and sufficient food all year round
○ Indicator 2.1.1 Prevalence of undernourishment
○ Indicator 2.1.2 Prevalence of moderate or severe food insecurity in the population, based on the Food Insecurity Experience Scale (FIES)
● Target 2.2 – By 2030, end all forms of malnutrition, including achieving, by 2025, the internationally agreed targets on stunting and wasting in children under 5 years of age, and address the nutritional needs of adolescent girls, pregnant and lactating women and older persons
○ Indicator 2.2.1 Prevalence of stunting (height for age <-2 standard deviation from the median of the World Health Organization (WHO) Child Growth Standards) among children under 5 years of age
○ Indicator 2.2.2 Prevalence of malnutrition (weight for height >+2 or <-2 standard deviation from the median of the WHO Child Growth Standards) among children under 5 years of age, by type (wasting and overweight)
SDG 5 – Achieve gender equality and empower all women and girls
● Target 5.1 – End all forms of discrimination against all women and girls everywhere.
○ Indicator 5.1.1 Whether or not legal frameworks are in place to promote, enforce and monitor equality and non-discrimination on the basis of sex.
SDG 8 – Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
● Target 8.5 – By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value
○ Indicator 8.5.1 – Average hourly earnings of employees, by sex, age, occupation and persons with disabilities
SDG 10 – Reduce inequality within and among countries
● Target 10.1 By 2030, progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average
○ Indicator 10.1.1 Growth rates of household expenditure or income per capita among the bottom 40 per cent of the population and the total population
● Target 10.2 By 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status
○ Indicator 10.2.1 Proportion of people living below 50 per cent of median income, by sex, age and persons with disabilities
● Target 10.4 Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality
○ Indicator 10.4.1 Labour share of GDP, comprising wages and social protection transfers
The Gesetz zur Regelung eines allgemeinen Mindestlohns (Minimum Wage Act) was enacted in Germany on January 1, 2015, establishing a universal minimum wage for the first time. Prior to this, Germany had only sectoral minimum wages. The initial minimum wage (MW) was set at €8.50 per hour. By establishing a floor for compensation, a minimum wageprotects vulnerable workers from exploitation and aims to guarantee decent livelihoods for all. It is especially important to ensure that the least wealthy individuals and professionals in industries where collective bargaining is not feasible are fairly paid. As a result, it improves the financial situation of workers in the bottom of the income distribution, particularly women, individuals with low-education attainment, immigrants, and other demographic groups that tend to be disproportionately affected by low wages. Therefore, the MW helps to close the gender pay gap and to equalize income distribution, promoting economic and social participation.
The Minimum Wage Commission (Mindestlohnkommission) is the independent body responsible for proposing minimum wage adjustments. It consists of a chairperson, three members from both employer and employee organizations, and two non-voting academic advisors. The commission is newly appointed every five years, and its proposals, which require a simple majority vote, are passed in June every two years. If a majority is not reached, the chairperson proposes a compromise and only votes if a majority remains elusive.
According to the Minimum Wage Act, the commission’s recommendations should be guided by the past development of collective bargaining wages, which is tracked by the Collective Wage Index of the Federal Statistical Office. The commission must also consider criteria such as ensuring adequate worker protection, fair competition, and not jeopardizing employment. The commission supports its decisions with a wide array of data and expert opinions from various external bodies and its own secretariat. The secretariat also provides information and advice to employees and companies.
Once the Minimum Wage Commission passes a resolution, the government drafts a Minimum Wage Adjustment Ordinance for the Federal Ministry of Labour and Social Affairs. After a three-week period for social partners and civil society organizations to submit opinions, the government can implement the proposed minimum wage adjustment without the consent of the Bundesrat[RC1] (the German legislative Federal Council). The government cannot change the amount proposed by the commission; it can only either implement the proposal or not. If the proposal is not implemented, the current minimum wage remains in effect[RC2] .
In addition to the statutory minimum, minimum wage standards in specific sectors can be declared generally binding through a ministerial ordinance, extending their application to employers who would not otherwise be bound by the collective agreement. The Minimum Wage Act defines that every worker has the right to be compensated with at least the minimum wage, with exceptions for apprentices and young workers in vocational training. As aforementioned, there are industry-specific minimum wages with wage levels above the statutory minimum wage negotiated by collective bargaining partners which the federal government declared to be generally binding in accordance with the Posting of Workers Act (AEntG), the Temporary Employment Act (AÜG), or the Collective Bargaining Agreement Act (TVG). There are generally binding agreements for all employers active in the following industries: Temporary employment, vocational training and further education services, roofing trade, electrical trade, meat industry, building cleaning, painting and varnishing crafts, nursing industry, chimney sweep craft.The Minimum Wage Act was evaluated in 2020. The evaluation revealed potential for development: In a European comparison, the German minimum wage, measured as a percentage of the national median wage, was below average. Rising living costs, particularly housing costs, also called into question if the minimum wage was suitable for ensuring an adequate standard of living on the basis of a full-time job. In addition, a full-time job paid at the minimum wage was not sufficient to achieve a poverty-avoiding old-age pension. Therefore, the minimum wage was increased exceptionally by law to a gross hourly wage of 12 Euro as of 1 October 2022. The next adjustment decision was made the following year, 2023, again by the Minimum Wage Commission as required by law.
Additionally, compliance with Germany’s minimum wage law faces significant challenges. Many employers use loopholes or illegal practices—such as underreporting hours or misclassifying payments—to avoid paying the full wage. Estimates suggest that in 2018, up to 2.4 million workers entitled to the minimum wage were still paid less. Monitoring is limited, with only 55,000 employer inspections in 2019, and enforcement places a heavy administrative burden on firms. Overall, while the law improved wages, ensuring its proper implementation remains a major issue.
The data also suggest that some employers adjusted working hours in response to the sharp increase in the statutory minimum wage to €12.00 in October 2022, which may have dampened the effect on monthly earnings. Also, while no widespread employment losses were observed immediately after the increase, further research is required to evaluate potential longer-term impacts on employment structures, hours, and informal practices. Overall, the €12 increase served as a strong upward push in the low-wage sector, though its full implications are still unfolding.
Finally, The minimum wage hike in October 2022 led to a disproportionately strong increase in wages for low earners, significantly narrowing the wage gap between the top and bottom of the earnings distribution in both East and West Germany. The trend is a clear sign of compression in wage inequality driven by statutory intervention.
-; Job placement/intermediation; Multilevel Governance
International Institutions
● ILO (International Labour Organization)
● OECD (Organisation for Economic Co-operation and Development)
● Eurofound (European Foundation for the Improvement of Living and Working Conditions)
● ETUI (European Trade Union Institute)
● ETUC (European Trade Union Confederation)
● SGI Europe (Social Employers and Services of General Interest)
National Institutions
● DGB (Confederation of German Trade Unions)
● BDA (Confederation of German Employers’ Associations)
● Institute of Economic and Social Research (WSI)
● German Economic Institute (IW)
● Institute for Employment Research (IAB)
● Institute for Applied Economic Research (IAW)
● German Institute for Economic Research (DIW)
The Minimum Wage Act introduced a nationwide minimum wage, which is monitored by a federal authority and customs authorities. In addition, it is possible to set sector-specific minimum wages at national or regional level. These sector-specific minimum wages must in any case comply with the general minimum wage.
According to the Federal Statistical Office of Germany (Destatis), approximately 19% of employees in Germany in April 2022 were working in the low‑wage sector, defined as earning below €12.50 gross per hour. This equated to around 7.5 million jobs, down from 8.0 million in April 2018 — a reduction of about 514,000 low‑wage positions. As a result, the share of low‑wage employment dropped from 21% to 19% across all dependent jobs in that period. From these, approximately 3.7% earn a minimum wage of 12.41 euros (April 2024).
Not applicable.