Worldwide, roughly 175 to 195 of the world’s approximately 195 to 216 countries and territories have, as the ILO says, “some form” of statutory minimum wage – among them is Germany. Sounds good – well, at the surface.

Despite its otherwise good labor reputation, Germany’s minimum wage has a very short history. Before 2015, there was no minimum wage. After the liberation from fascism, Germany relied on industry-specific minimum wages negotiated between workers and trade unions on one side and employers on the other. 

Through collective bargaining, this defined the lowest wage, which was then set by the state as the minimum wage for all. This was called – using a typically unpronounceable word – Allgemeinverbindlichkeitserklärung. Perhaps not the most beautiful word in the German language.

Things changed in 2014 when Germany’s parliament approved legislation introducing a minimum wage. It ended a decade-long debate and came as an agreement between Germany’s social-democratic SPD party and Merkel’s CDU, fulfilling an electoral promise made by the SPD.

A year later, Germany’s minimum wage was set at €8.50 (about $10) per hour. This excluded workers under 18, interns, and trainees, and some sectors were given a two-year grace period to comply. Starting in 2016, a commission of trade union and business representatives was set up to evaluate the minimum wage every two years.

Between 2016 and 2021, it gradually increased to around €9.60 ($11) in 2021 – not really a wage that makes anyone comfortable. By 2022, it jumped to €12 ($14). In 2025, it increased to €12.82 ($15), while on January 1, 2027, Germany’s minimum wage reached €14.60 – described as the largest minimum wage increase in the country’s history. This falls short of the €15 target promised in the CDU/CSU–SPD coalition agreement. Around six million people in Germany are employed in minimum-wage jobs.

That is not all. Employers and corporate bosses are also cheating when it comes to the minimum wage. Calculations by Germany’s peak union body, the DGB, show trickery orchestrated by management. Here are the top ten tricks used by management to avoid paying even the minimum wage:

1. failure to pay overtime
2. forcing employees to work off the books
3. deliberate employee misclassification as interns, apprentices, etc.
4. tips are stolen – my personal favorite
5. illegal deductions in pay for food, housing, clothes, etc.
6. being forced to work off the clock
7. clocking out while continuing to work
8. working time being inaccurately recorded on purpose by management
9. no meal and rest breaks
10. not being paid at all – my all-time favorite

These tricks are used most commonly against workers in restaurants, retail, and agriculture – areas where workers often earn the minimum wage. These illegal tricks used to circumvent the minimum wage also extend to not paying into Germany’s social security funds.

According to a recent calculation by the German Confederation of Trade Unions covering 2015 to 2024, management trickery costs workers in Germany up to €64bn ($74.3bn) – that is, €64,000,000,000. In other words, management is stealing, and it’s stealing massively. Germany also loses about €7bn ($8.2bn) in taxes as a result – enough to have built eight hospitals, had management not stolen it.

Unsurprisingly, Germany’s employers doubt these numbers. As a good corporate citizen dedicated to corporate social responsibility and business ethics, the lobby agency of Germany’s corporate bosses says, “these violations are not acceptable and need to be consistently examined and followed up.” How nice of them.

According to the DGB, around six million workers currently receive the minimum wage. The minimum wage is set as an hourly rate, but work hours are not always fully paid, and two million workers are suffering very serious financial losses as a result, according to DGB calculations.

The DGB refers to data from a socio-economic panel (SOEP) – an annual survey of around 30,000 people in 20,000 households. From information about working time and earnings, DGB experts calculated the €64bn figure. The DGB identified the groups of workers who suffer most from minimum wage theft by management:

1. part-time workers
2. contract workers
3. women
4. workers in East Germany

All this will get worse when placed in relation to the planned austerity measures by Germany’s current conservative government, which will hit workers at the lower end of the income scale hardest. It also means workers will have to keep fighting wage theft themselves.

In other words, minimum wage fraud by management is not a trivial offense. It must be consistently prosecuted – particularly by those who claim to favor law-and-order, like Germany’s conservatives. Not to worry: the “less red tape” ideology and the demand for eliminating “overbearing bureaucracy” are here to help.

This deliberately weakens Germany’s state institutions. Statistically speaking, each company in Germany is inspected only once every 140 years. Effective deterrence is not possible under these conditions. Worse, it is not even wanted, as it has been made deliberately impossible. What is wanted is the ability for politicians to announce, “we are doing something” and “we are controlling companies.” The “less red tape” ideology serves two purposes: politicians get to pretend they’re doing something, while management gets away with stealing wages.

The “less bureaucracy” ideology also has additional benefits – for politicians, not for workers. A German customs unit called Finanzkontrolle Schwarzarbeit (FKS) is responsible for monitoring undeclared work. Currently, the FKS has around 2,500 vacant positions – in other words, 2,500 officers missing who could otherwise be inspecting companies.

The DGB is calling for a comprehensive package of measures to strengthen law enforcement. Isn’t “strengthening law enforcement” supposed to be the classic domain of a conservative party like Merz‘s CDU? Seemingly not, when it comes to dodgy businesses, thieving management, and companies that don’t even pay minimum wage. Not even the much-trumpeted “deterrence” is mentioned.

Instead of staunchly following the “less bureaucracy” ideology, what is needed in Germany is the exact opposite: the capacities of the FKS must be significantly expanded. In addition to risk-based audits, inspections independent of specific suspicions are required.

Swift and effective sanctions against management and companies, and an improved whistleblower system, are just as necessary as closer cooperation between German authorities in dealing with managerial offenders. Furthermore, specialized public prosecutor’s offices should be established to ensure that investigations into corporate misconduct and criminality are consistently brought to German courts and have a deterrent effect.

Workers in Germany who do not receive the minimum wage, do not receive it in full, or are conned out of it by management should first raise the matter with their bosses. If this does not work – which is likely – they can contact trade unions, works councils, or Germany’s customs authority, the FKS.

Information is also provided by Germany’s minimum wage hotline and on the Minimum Wage Commission’s website. However, many affected individuals shy away from going public, out of fear of losing their jobs or out of a sense of shame. A well-functioning whistleblower protection system remains indispensable.

Germany’s statutory minimum wage is and remains an important tool for protecting against wage dumping, but it is not the be-all and end-all. Consistently good wages and fair working conditions are primarily achieved through collective bargaining agreements. Hence, German unions call on policymakers to decisively strengthen collective bargaining coverage and to create a framework in which employment secured by collective agreements becomes the rule rather than the exception.

Beyond minimum wage theft in Germany, and for wage theft in general, workers who have been conned out of wages by management have five avenues at their disposal:

1. know your labor rights and exercise them;
2. file a wage claim to recover unpaid wages with a local institution;
3. file a report of the labor law violation with a trade union or a labor lawyer;
4. file a retaliation complaint with the local EEO office, state labor office, etc., if you were fired, demoted, or punished for reporting labor law violations;
5. share your case on the website: http://www.wagetheftisacrime.com.

---