Germany’s minimum wage has significantly increased the incomes of low wage earners, particularly in eastern Germany, according to a study by the Institute of Economic and Social Research (WSI) published on Friday.
Germany introduced the statutory minimum wage of €8.5 ($9.3) per hour on January 1, 2015. That led to significant increases in salaries in the lower income bracket as a result, the analysis found. The institute is part of Hans Böckler Foundation, which is the German Trade Unions foundation.
Between 2013 and 2018, incomes increased by an inflation-adjusted average of 21% for employees in eastern Germany and by 31% for those with a monthly wage of just under €1,300 ($1,430).
In western Germany, the minimum wage’s effects were also positive but less pronounced, as fewer people work in the low-wage sector. The increase in the lower income bracket was around 12%, the study said.
“This is likely mostly a minimum wage effect,” said study author and labour market expert Toralf Pusch.
The minimum wage has significantly contributed to reducing wage inequalities in various regions, he said. “The clear rise in monthly incomes also refutes the concerns of some experts who criticize the minimum wage that employers might reduce the number of hours for employees in the minimum wage sector as a result.”
Income increases for individuals with relatively high incomes were less pronounced between 2013 and 2018, which increased by about 14% in the eastern Germany and 11% in the west, the study said.
