In Germany, the Mindestlohn, or minimum wage, holds significant importance in upholding fair working conditions for its citizens in Europe’s largest economy. The year 2024 marks a pivotal moment as the Minimum wage in Germany experiences an increase, shaping a new landscape for both employees and employers alike. Here’s what you need to know:
What is Mindestlohn in Germany?
The federal government oversees the determination of the minimum wage in Germany, known as Mindestlohn, on an hourly basis. Germany leads among EU countries in terms of minimum wage. Establishing the minimum wage in Germany at the gross level is essential to note. The distinction between gross and net salary, which can exceed EUR 500, greatly affects the actual income of employees.
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Increase of minimum wage in Germany by 2024
In 2023, the minimum wage stood at 12 euros per hour gross. Starting January 2024, the rate will see an increase to EUR 12.41 gross. There are plans for a subsequent rise to 12.82 euros in the early months of 2025.
How much is the monthly minimum wage in Germany?
The rise in the minimum wage translates to an increase in monthly income for full-time employees, reaching approximately EUR 2,200 gross. This notable improvement has the potential to enhance living conditions and foster financial stability.
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What is the lowest net income in Germany?
Net pay in Germany is affected by elements like your tax category, residence location, living situation, and the inclusion of dependents.. As of 2023, with an average monthly working time of 176 hours and a gross salary of EUR 2,112, individuals in tax class 1 can expect approximately EUR 1,500 in hand, according to information from the t-online portal. Individuals living alone, including those who are unmarried, divorced, or widowed, usually fall into tax class 1. In 2024, someone in the first tax class is expected to have a net income of around EUR 1,560 in Germany, representing the lowest national income tax.
Net minimum wage calculator
The salary calculator is a useful tool that assists in determining your net salary. The Stiftung Warentest Foundation has generously provided a free online calculator. By entering the gross amount and detailing your family situation, you can instantly discover your expected earnings for 2024. This tool is a convenient way to estimate your take-home income.
The Stiftung Warentest gross-net calculator incorporates tax changes effective from 2024. These changes encompass:
- New formula for calculating income tax
- Increased free basic income (from 2024 it will increase to €11,604)
- A higher tax-free allowance for child maintenance expenses (Kinderfreibetrag). From 2024 it will amount to EUR 6,384 (EUR 3,192 per parent)
- Higher tax limits for tax classes V and VI
- Preliminary contribution limits for compulsory pension and health insurance
- Changes in the deduction of relief for the care of the elderly
The impact of the minimum wage increase on the economy
Increasing the minimum wage has the potential to boost economic growth by fostering increased consumption. However, the higher labor costs associated with such an adjustment may impact companies’ decisions regarding hiring.
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The raise in the minimum wage, set to take effect in Germany in 2024, shows a significant stride toward developing the quality of life for employees while posing a challenge for employers. This shift underscores Germany’s dedication to promoting social justice within the labor market.