The federal government has initiated an increase in the statutory minimum wage to 12 euros as of October 1st and higher earnings limits for mini-jobs.

According to a government representative, the cabinet approved a corresponding proposal by Federal Labor Minister Hubertus Heil (SPD) on Wednesday.

Raising the minimum wage to 12 euros is one of Chancellor Olaf Scholz's key campaign promises.

In the coalition agreement, the FDP, for its part, pushed through an increase in the limit for mini-jobs by 70 euros.

From October 1st, monthly earnings of up to 520 euros will remain tax and social security-free for employees.

According to the draft law, around 6.2 million employees can expect a salary increase as a result of the higher minimum wage.

Employers are therefore faced with additional costs of around 5.6 billion euros per year for which social security contributions are incurred.

Additional income of 2.2 billion euros is therefore expected for social insurance.

The statutory minimum wage was introduced in 2015 at a level of EUR 8.50.

It is currently EUR 9.82, but on July 1, the lower wage limit will rise to EUR 10.45 in accordance with current law.

Employers see the increase to 12 euros as an attack on collective bargaining autonomy, since the Minimum Wage Commission made up of representatives of employers, employees and economists actually decides on the amount of the minimum wage in Germany.

The earnings limit for mini-jobs, currently €450 a month, was last increased in 2013.

While they are tax-free for employees, employers pay a flat rate to the social security funds and the tax office.

In June 2021 there were around 7.4 million mini-jobbers.

For a good three million of them, this was a part-time job alongside their main job.