Every second company affected (50 per cent) plans to increase prices. Other consequences cited by respondents were lower profits and a poorer competitive position.
The study is based on data from the October 2025 ifo Business Survey of over 4,600 companies in Germany. It also compares the current survey with the reactions of companies to the minimum wage increase in 2022, when the companies affected expect far lower effects on their profitability and demand and were therefore less likely to plan to respond by cutting jobs and investments.
“The upcoming minimum wage increase at the turn of the year represents a significant rise in wage costs for the companies affected,” said ifo researcher Sebastian Link. “The reactions of companies show that raising the minimum wage is particularly damaging in the current phase of economic weakness. Although companies are similarly affected as was the case with the last large increase in 2022, more of them are planning to cut jobs and investments.”
The rise from €12.82 (~$14.87) to €13.90 (~$16.12) per hour corresponds to an increase of 8.4 per cent. The minimum wage will therefore rise far more strongly than the general collectively agreed wages, which are expected to increase by just three per cent in 2026.
More than a third of the companies surveyed (37 per cent) stated that they were directly affected – with hospitality (77 per cent) and retail (71 per cent) leading the way. Among manufacturing companies, the textile and clothing industry (62 per cent) is mainly impacted by the minimum wage increase.
ALCHEMPro News Desk (RR)
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