Increase in minimum wage brings advantages to approximately 230,000 individuals - Boost granted to the wages of over 230,000 individuals through minimum wage hike
In a significant move for workers in Schleswig-Holstein, the minimum wage is set to increase, with far-reaching implications for low-income households and particularly women. The new minimum wage will rise to €13.90 per hour from January 2026, and further to €14.60 per hour in January 2027.
Laura Pooth, chair of the German Trade Union Confederation North, has emphasised the importance of a fair minimum wage, stating that it is essential for ensuring fairness and reducing income inequality. The increase will affect approximately 23 percent of employees in Schleswig-Holstein, or around 292,000 people, according to estimates based on a wage survey from April 2024.
The minimum wage increase is expected to provide financial relief for low-income households, with incomes rising above the basic tax allowance (*Grundfreibetrag*) of €12,096 gradually taxed starting at 14%. This means that even with the increased minimum wage, many workers will still see higher net take-home pay.
Sectors with traditionally low wages, such as retail, logistics, and catering, are particularly affected by the minimum wage increase. Given that women statistically earn less than men and are often disproportionately represented in lower-paid jobs, the minimum wage increase is likely to disproportionately benefit women, helping address income inequality partially.
While specifics on the impacts on Schleswig-Holstein's sectors are not detailed, typical sectors affected by minimum wage increases include retail, hospitality, cleaning, and caregiving—all sectors where many women and low-income workers are employed.
However, it's important to note that a minimum wage increase can have mixed effects. Some employers might adjust hiring practices or shift to automation, potentially limiting employment growth in vulnerable sectors. However, evidence suggests these effects are often moderate and context-dependent. Given that Schleswig-Holstein is a moderately sized economy, effects might vary by subregions and company sizes.
Overall, the minimum wage increase in Schleswig-Holstein is expected to improve the incomes of low-income households, especially benefiting women, who are overrepresented in lower-paid, minimum wage-dependent sectors. This can help reduce gender pay gaps and improve economic security for vulnerable groups. For more precise projections specific to Schleswig-Holstein, consulting economic impact studies or government labor market analyses focused on the minimum wage increase would be necessary.
- The community policy could consider offering vocational training programs for low-income individuals to enhance their job skills and improve their earning potential, thus further benefiting from the increased minimum wage.
- To ensure sustained financial stability for those benefiting from the minimum wage increase, personal-finance workshops and business management courses could be integrated into vocational training programs, teaching practical skills in budgeting, investment, and entrepreneurship.
