ifo President Fuest Warns Against Politically Determined Minimum Wage of EUR 15 in Germany
The President of the ifo Institute, Clemens Fuest, opposes the German government setting the minimum wage to EUR 15. “The current economic situation does not allow for an increase in the minimum wage to EUR 15. Our economic output has been shrinking for two years. Average wages are nevertheless rising, but not nearly to the extent of the demanded minimum wage increase,” says Fuest. From 2023 to 2025/26, collectively agreed wages are expected to rise by 13%. Increasing the minimum wage to EUR 15 would be equivalent to an increase of almost double (25%) over the same period.
In Fuest’s view, political parties should hold back from making decisions on this issue: “It would be preferable to leave it up to the Minimum Wage Commission again to set the level of the minimum wage and keep the issue out of the election campaign.” He said that ten years after its introduction, the minimum wage had become a political pawn, which was precisely what the independent Minimum Wage Commission was originally intended to prevent.
In the German election campaign, the SPD and the Greens are calling for the minimum wage to be increased from EUR 12.81 to EUR 15. The SPD wants to reach this level in 2026, the Greens as early as 2025. The minimum wage of EUR 12 was already a political demand during the last German election campaign in 2021, which was then also implemented – regardless of the recommendations of the Minimum Wage Commission.
Opinion
Minimum Wage as a Political Football
When the German government introduced a statutory minimum wage in 2015, there were widespread concerns. Critics warned that it could undermine collective bargaining autonomy and feared a populist bidding war over minimum wage levels in future election campaigns. To prevent this, an independent Minimum Wage Commission was established, comprising representatives of the collective bargaining parties. Its mandate was to propose adjustments to the minimum wage based solely on objective criteria. The idea was that the minimum wage should follow the average development of collectively agreed wages rather than act as a wage driver itself, thereby preserving collective bargaining autonomy.
