Germany’s minimum wage has significantly increased the incomes of low-wage earners, especially in eastern Germany, according to a study published on Friday by the Institute for Economic and Social Research (WSI).
Germany introduced a statutory minimum wage of €8.5 ($9.3) per hour on 1 January 2015, leading to significant wage increases in the lower income bracket, the analysis found. The institute is part of the Hans Böckler Foundation, the German trade union foundation.
Between 2013 and 2018, incomes rose by an inflation-adjusted average of 21% for workers in eastern Germany and by 31% for workers earning just under €1,300 ($1,430) per month.
In West Germany, the effects of the minimum wage were also positive, but less pronounced, because fewer people work in the low-paid sector. The increase in the lower income class was about 12%, the study found.
“This is probably mainly an effect of the minimum wage,” said Toralf Pusch, author of the study and labor market expert.
The minimum wage has contributed significantly to reducing wage gaps across regions, he said. “The marked increase in monthly incomes also refutes the concerns of some experts who criticize the minimum wage, namely that employers could reduce the number of hours for workers in the minimum wage sector as a result.”
The study shows that the income increase for people with a relatively high income was less pronounced between 2013 and 2018. In eastern Germany, income increased by around 14% and in western Germany by 11%.
