Increased Minimum Wage Exceeds National Living Wage Figure
In a recent study conducted by the Wirtschafts- und Sozialwissenschaftliches Institut (WSI) of the Hans-Böckler-Stiftung, it was revealed that full-time employees earning the minimum wage have more disposable income than recipients of unemployment benefits, regardless of household type and region of residence.
The study, which confirms the results of other investigations, found that even after accounting for housing benefit, a single man receiving unemployment benefits would have a total of 1015 euros, 557 euros less than with a minimum wage job. This gap varies regionally, with higher gaps in eastern Germany, including Berlin.
The WSI director, Bettina Kohlrausch, emphasized that the claim that people on unemployment benefits do not want to be employed because they can live well on unemployment benefits is factually wrong and stigmatizing. She also suggested that qualification of employable people on unemployment benefits would help in addressing the issue.
Eric Seils from the WSI department for social policy contradicted the assumption that unemployment benefits are so high that the incentive for low-paid work is lacking. In Munich county, Dachau, and the city of Munich, the wage gap for a single household ranges from 379 to 444 euros. In Nordhausen and the Vogtland district, the wage gap is the highest at 662 and 652 euros, respectively.
Despite the findings, the study does not provide context about the plans or policies of the current traffic light coalition regarding poverty, housing costs, or fair wages. The social policy plans of the previous traffic light coalition, which included reducing poverty, assisting with housing costs, and ensuring fair wages, faced significant challenges and limited visible progress by mid-2025.
Unemployment remains high at nearly three million, and critics argue that the coalition’s policies were more cosmetic than transformational. There is significant criticism that efforts to integrate people into jobs, such as the citizen’s income concept, have not succeeded sufficiently to reduce poverty materially.
No significant breakthroughs or clear government achievements regarding assistance with housing costs were found in the sources, implying limited progress or implementation problems. Employers call for a fresh start, emphasizing that workers should retain more net income from extra earnings; they criticize the increase in social security contributions as a barrier to employment and fair wages.
The federal government created a EUR 500 billion infrastructure fund covering transport, energy, healthcare, education, and climate projects, but this mostly addresses broader infrastructure and climate goals rather than directly targeting social policy issues like poverty or housing aid.
The fall of the traffic light coalition in 2025 and the formation of a new Black/Red coalition with Chancellor Friedrich Merz also shifted political priorities. The new government is focused on labor market reforms and fiscal policies, with criticism of the previous coalition’s social policies as insufficient.
Over 800,000 people on unemployment benefits are also so-called top-up recipients, who receive additional unemployment benefits because their income is not enough to live on. The study does not delve into the specifics of these top-ups or their impact on the overall wage gap.
In conclusion, while the traffic light coalition had ambitious social policy goals for poverty reduction, housing support, and wage fairness, by 2025 these objectives remained inadequately realized amid persistent unemployment and calls for more substantive labor market reforms. The political turnover and new government agenda suggest a pivot away from those plans towards different priorities.
- The study conducted by the Wirtschafts- und Sozialwissenschaftliches Institut (WSI) has highlighted a significant disparity between the income of full-time minimum wage workers and unemployment benefit recipients, which raises questions about the financial aspect of business, general-news, and politics.
- Despite the findings of the study, there seems to be a lack of clarity regarding the plans or policies of the current government in addressing issues like poverty, housing costs, and fair wages for business and labor, pointing towards a need for reconsideration in finance and politics.
