Germany Raises Minimum Wage to €13.90 in 2026 Amid Mixed Economic Reactions

Germany has implemented a significant increase in the national minimum wage starting January 2026, raising it by €1.08 to €13.90 per hour. This adjustment is set to benefit around 4.8 million workers, predominantly women, with a further planned rise to €14.60 per hour in 2027. The government’s move is part of a broader economic plan that also includes reducing bureaucracy by 25%, aiming to generate a €16 billion economic relief while introducing other reforms impacting workers, pensioners, and drivers.

Despite the positive prospects for low-wage earners, the increase has drawn mixed reactions from employers. According to a survey by the Ifo Institute, approximately 22% of businesses anticipate job cuts as a direct consequence of the higher wage floor. However, a survey among 150 regional Jobcenters conducted by the Federal Employment Agency presents a more optimistic perspective: 88.9% expect either no negative impact or even positive effects on employment levels. This is an improvement from concerns raised in previous years.

Political responses also vary. The CDU and CSU parties support the phased wage hikes, considering them a balanced solution addressing poverty among low-income workers. CDU politician Marc Biadacz emphasized that around six million people will benefit from the decision. Conversely, experts criticize the pace and scale of the wage adjustments, pointing out the failure to keep pace with inflation and real wage losses experienced in recent years. They argue that a higher minimum wage of €14.61 should have been implemented by 2024, rising to €15.12 in 2025, a target initially proposed by the SPD.

The government's comprehensive economic adjustments also feature new tax laws affecting sectors like healthcare and construction and introduce measures such as a new public transport ticket for apprentices and tax-free earnings for retirees continuing work beyond retirement age. The effectiveness of these multifaceted reforms is yet to be fully realized, but they collectively aim to bolster Germany’s economic resilience while supporting vulnerable workers.