German Minimum Wage Increase to €13.90 in 2026 Hits Half of Businesses, Sparking Price Hikes and Service Adjustments

Germany's statutory minimum wage is set to rise from €12.82 to €13.90 per hour in 2026, with a further increase to €14.60 planned for 2027. This significant wage uptick is poised to reshape business wage structures and economic conditions amid a fragile economy.

According to a survey from the German Chambers of Industry and Commerce (DIHK), involving nearly 15,000 companies, about 50% of businesses must adjust wages either by raising pay for minimum wage workers directly or by increasing salaries at higher wage levels to maintain wage differentials. Retail and hospitality sectors are among the hardest hit, with 31% and 50% of companies respectively reporting impacts. Industrial sectors such as printing and medical technology also face considerable effects, with roughly 41% needing to adjust wages. In contrast, the construction sector expects only a 17% impact.

Regional disparities exist, with East Germany showing a higher rate of wage increases in response to the new minimum wage—29% compared to the national average of 25%. Approximately 40% of companies plan to offset increased labor costs by raising prices, rising to 52% in East German businesses. While only 7% of firms anticipate limiting production or services, certain sectors such as hospitality (22%) and security services (21%) anticipate more service limitations.

The wage increase is part of broader legislative changes taking effect January 1, 2026. The German government aims to reduce bureaucracy significantly, promising relief measures worth €16 billion for businesses. Other reforms include tax benefits for workers and retirees, such as the "Aktivrente," which allows retirees to earn up to €2,000 tax-free monthly while working beyond retirement age.

Businesses are cautiously optimistic about the government's plans, though many express skepticism regarding the tangible impact on reducing administrative burdens. The minimum wage increase, coupled with other regulatory changes, signals notable shifts for German enterprises, workers, and consumers in 2026.