Berlin Faces EU Penalty as Labour Market Reforms Stall Over Weekly Hours and Pay Transparency

Germany risks EU infringement after missing pay transparency deadline; domestic battles over working hours, minimum wage, and sector costs intensify ahead of early 2027 implementation.

Germany is hurtling toward a European Union infringement procedure after missing a June 2026 deadline to transpose the bloc’s pay transparency directive, even as coalition negotiators, unions, and employer groups clash over a broader overhaul of the country’s labour laws. The standoff, playing out today at the Chancellery, pits demands for more flexible working hours and lower bureaucracy against union warnings of social backsliding.

The EU directive grants workers in companies of 100 or more employees the right to request information on average salaries broken down by gender. Its stated goal is to narrow Germany’s gender pay gap, which stood at 15.6% in 2024 – well above the EU average of 11.1%. Berlin now aims to implement the rules by early 2027. “We are working on a low-bureaucracy solution,” said Family Minister Prien, though no draft law has yet been presented.

At the heart of the domestic reform push is a fundamental change to working-time law. The government, led by Chancellor Merz, wants to replace the current daily maximum of eight hours with a weekly cap. Critics, including DGB chairman Yasmin Fahimi, call the plan “an ideologically driven wrong turn” that could allow shifts of up to 13 hours in a single day. Employer groups, however, argue that the existing rules are outdated and that Germany’s labour costs – with non-wage costs accounting for 48% of total labour costs – are a competitive drag.

Another flashpoint is the minimum wage. Currently at €13.90, it is scheduled to rise to €14.60. The number of low-wage jobs in Germany has fallen to around 6.3 million, or about 16% of all positions – 1.3 million fewer than in 2014. The decline has been especially sharp in eastern Germany. Yet Chancellor Merz warns that the country has become too expensive. Studies by IW Consult counter that higher pay can actually boost productivity, creating a “productivity spiral” by encouraging workers to switch to more efficient firms.

Sector-specific concerns add further complexity. Asparagus farmers and parts of the Christian Democratic Union (CDU) earlier this year called for an exemption on the minimum wage for seasonal workers – a proposal the agriculture ministry has already rejected in past reviews. Meanwhile, the long-term care sector has seen average hourly wages for skilled staff climb to between €23.60 and €24.20, up as much as 22% since 2022. The flip side: nursing home fees have also risen, hitting residents’ wallets. Some within the CDU are now floating a suspension of the collective-bargaining loyalty clause until 2031 to ease the cost burden.

With Brussels’ patience running thin and domestic fronts hardened, the pressure is on the Merz government to reconcile flexibility with worker protections – and to do so before the EU turns threat into action.