Germany to raise minimum wage to $14.52 in 2020

Increase expected to lift household spending during U.S. tariffs rift
By Michael Nienaber
|payroll-reporter.com|Last Updated: 06/27/2018
Merkel
German Chancellor Angela Merkel gestures as she leaves after leaving a news conference in Berlin on June 18. REUTERS/Hannibal Hanschke

BERLIN (Reuters) — Germany plans to raise the minimum wage to 9.19 euros (C$14.26) per hour next year and to 9.35 euros (C$14.52) per hour in 2020, the labour minister said on Tuesday, paving the way for a possible boost to private consumption in Europe's biggest economy.

Chancellor Angela Merkel's government introduced a national minimum wage of 8.50 euros (C$13.18) for more than 3 million workers in 2015. It was last raised in 2017, to the current 8.84 euros (C$13.71).

The increase, proposed by a commission, is likely to help lift household spending as U.S. President Donald Trump's protectionist trade policies pose a threat to Germany's export growth.

The International Monetary Fund and the Organization for Economic Co-operation and Development have both urged Germany to raise wages and invest more to boost domestic demand and reduce its large current account surplus.

Labour Minister Hubertus Heil welcomed the recommendations and said the two-stage rise reflected the robust economy and vibrant labour market, which have led unions and employees to agree generous pay increases this year.

The government was following the commission's previous recommendation when it raised the minimum wage in 2017.

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