In a statement on Saturday, German Chancellor Olaf Scholz said on Saturday that his Social Democrats SPD were pushing ahead with their election promise to raise the minimum wage to 12 euros an hour, as it was important to show respect for low-paid workers.
Social Democrat Labor Minister Hubertus Heil presented a draft law on Friday that proposed to raise the wage floor from 9.82 euros to the current 9.82 euros from October onwards.
It's important for me to show respect for the achievements of employees and raising the minimum wage to 12 euro is one of the most important legislative projects. I'm glad it's on its way now! Scholz said something on Twitter.
The labor ministry estimates that more than 6 million people will benefit from the measure and that the increase will cost employers some 1.6 billion euros in October-December.
Heil told Reuters on Friday that he expects the change to benefit employees in Eastern Germany and women working in the care sector and other services where wages are traditionally very low.
The labor ministry sent around its proposal to the other departments on Friday, with the Social Democrats expecting their junior coalition partners Free Democrats and Greens to back the bill as agreed in coalition talks last year.
The draft law is expected to be passed in February and parliament is expected to adopt the higher minimum wage before the summer break.
Employers associations have warned that the measure could be challenged in court and said the increase by more than 20% was too high. Scholz and Heil pushed back against assertions that a higher minimum wage could lead to job cuts.
As a way to attract more foreign workers, higher wages are seen as a way to attract more foreign workers, as German companies are already suffering acute labor shortages in many sectors of the economy.
The Bundesbank central bank has warned that the plan could push wages up and increase overall price pressures at a time of already high inflation in Europe's largest economy.