Legal minimum wage has significantly increased the income of low-income earners
The statutory minimum wage has significantly increased the incomes of low-wage earners, particularly in Eastern Germany, according to an analysis by the Economic and Social Science Institute (WSI) of the trade union-affiliated Hans-Böckler Foundation in Düsseldorf.
The statutory minimum wage was introduced on January 1, 2015. Consequently, there have been significant increases in wages in the lower income bracket. For employees in Eastern Germany, these increased by an average of 21 percent, adjusted for inflation, between 2013 and 2018, with those earning around 1,300 euros per month seeing a 31 percent increase. In Western Germany, the effects were also positive but less pronounced, as fewer people work in the low-wage sector. Thus, the increase in the lower income bracket was around 12 percent.
"These are likely predominantly minimum wage effects," said study author and labor market expert Toralf Pusch. The minimum wage has significantly contributed to reducing wage inequalities across different regions. "The clear increase in monthly incomes also dispels the concern of some minimum wage-critical experts that employers might reduce the number of hours worked by employees in the minimum wage range in response to the introduction of the wage floor."
The minimum wage increase especially benefited low-wage earners in Eastern Germany, significantly reducing wage inequalities between regions. This especially led to a substantial increase in the monthly incomes of employees earning around 1,300 euros.
