Labor Costs

In Germany's Former East, Trading Minimum Wages for New Jobs

Warnstreik Salzgitter AG
Knut Geisler, a district organizer for IG Metall, a German metalworkers union, speaks on July 4, 2014, to during a temporary work stoppage at Salzgitter AG, a mining company in northcentral Germany.
  • Why it matters

    Why it matters

    Germany’s first minimum wage law is forcing the hospitality industry to raise its pay, but doing that too much too soon could cause job losses, employers warn.

  • Facts


    • Germany’s hotel and restaurant industry generates revenue of €65.3 billion ($88.3 billion) a year.
    • 70,000 businesses are represented by the German industry association, DEHOGA.
    • U.S. minimum wage is $7.25 per hour but some states mandate higher pay.
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Beginning in 2015, hotels and restaurants in the former East Germany must pay employees the legal minimum hourly wage of €8.50 ($11.49). But the law, as formulated by the federal minister of labor and social affairs, Andrea Nahles, allows industries that would be greatly affected to undercut the minimum until 2017.

While the hotel/restaurant industry association, know by its German acronym, DEHOGA, doesn’t question a legal minimum wage in the former West Germany, it warns of many job losses in the former East Germany because businesses there can’t afford to hire at that rate.

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