Since the Minimum Wage Act came into force in Germany on 1 January 2015, a general statutory minimum wage has applied across the country. Wage floors of this kind are in place in virtually all European countries and in the US. Minimum wage laws are enacted to prevent wage dumping, i.e. the practice of offering workers unreasonably low pay.
The statutory minimum wage was controversial at the time it was introduced in Germany, and the amount at which it is set has been the subject of repeated public debate. Since 2015, the minimum wage has been raised at regular intervals on the recommendation of the Minimum Wage Commission and once as the result of an unscheduled resolution of the Federal Government. At €12.41, it is currently around 46 per cent above the hourly rate of €8.50 that applied when the law was introduced. It January 2025, it is set to rise to €12.82 per hour. There are currently calls for this be raised to €15, however.
How does the statutory minimum wage affect pay and employment? How does the level at which the minimum wage is set, in combination with other factors, affect supply and demand in the labour market? And what consequences might this have for distribution, hardship, social inclusion, productivity, prices, competition, working conditions, and company structures? The IAB’s research and advisory services focus on these and other questions.
On this dedicated page, we have compiled a list of current IAB publications and projects that are related to the subject of the minimum wage.