The likelihood of job reductions is particularly pronounced among businesses with lower-paying jobs, with nearly one-third of those currently paying the minimum wage expecting declines in employment.

If implemented, the proposed increase to €14 would directly impact more than half of all businesses, a significant rise compared to the previous increase to €12 in October 2022.

The IAB study also indicates that 58% of businesses across both West and East Germany employ workers earning less than €14.41.

In terms of regional differences, 25% of businesses in East Germany reported paying the current minimum wage in their lowest pay categories, compared to 18% in West Germany.

This study adds fuel to the ongoing political and economic debate regarding the minimum wage, with the SPD and Greens in the ruling coalition advocating for a raise above €14.

Opposition to a sudden minimum wage increase is voiced by the FDP and leading business associations, who prefer to leave the decision to a divided commission.

This commission, which includes representatives from unions and employers, is expected to propose the extent of the minimum wage increase by mid-2025 for implementation in 2026.

Federal Labor Minister Hubertus Heil (SPD) has echoed concerns about potential job losses in a letter to the Minimum Wage Commission, which is tasked with proposing an increase for 2026.

IAB researcher Erik-Benjamin Börschlein emphasized that a sudden increase in the minimum wage would likely have a significant impact on wage structures and employment expectations in Germany in the short term.

A recent study by the Institute for Employment Research (IAB) has revealed that nearly one in five businesses in Germany anticipates job losses if the minimum wage is raised from €12.41 to €14.

Overall, about 19% of all surveyed businesses predict job cuts in response to the proposed increase in the minimum wage.