Over 2.9 million Germans are currently receiving enhanced financial support
After a 20-month delay, the long-awaited wage increase for millions of German public sector employees is finally being implemented. The pay increase, amounting to an additional 110 euros per month, is set to take effect from April 1, 2022.
The delay was primarily due to a statutory 20-month gap between the calculation of the median wage and the actual adjustment of the minimum wage. Specifically, the median wage was calculated in April 2020, but the new minimum wage adjustment would not come into effect until January 2022. This delay means that by the time the wage increase is implemented, nominal wages will have already risen, causing the adjusted minimum wage to fall short of the intended benchmark (60% of median wages) again.
Contrary to speculation, the delay was not caused by any editorial negotiations between employers and unions. Instead, it was a procedural timing issue dictated by law and implementation rules. The wage recalibration formula and timing create a systematic lag, impacting the effectiveness and timeliness of wage increases.
The completion of the negotiations has allowed for the transfer of the money, which is starting to flow after a delay. Employees can also anticipate significant back payments, as the payments for the months that the delay lasted are now being processed.
In addition to the wage increase, public sector employees will also receive an additional day of vacation starting from January 2022. The so-called editorial negotiations, where employers and unions work out the legally necessary and binding steps, were the reason for the delay in payments, but the question of why the delay occurred remains unanswered.
Criticism comes from Saxony, stating that the wage agreement would burden municipalities due to their financial situation. However, with the payout of the promised money finally underway, public sector employees can look forward to more money each month and a well-deserved additional day of vacation.
References:
[1] "Minimum Wage Adjustment Delayed by 20 Months: What You Need to Know." Der Spiegel, 1 March 2022. Web. 1 March 2022. https://www.spiegel.de/wirtschaft/soziales/mindestlohn-verzoegerung-20-monate-was-sie-wissen-mussen-a-127518044.html
Other business areas could learn from the procedural issues encountered in the public sector wage adjustments, given the delay and its impact on the effectiveness of the wage increases. The additional finance from the wage increase and the extra day of vacation will significantly boost the income of public sector employees.
