Recent data from German customs has revealed a worrying reality in the labor market of Europe's largest economy, showing that thousands of employers are still circumventing minimum wage laws. These revelations come at a time when the German government is striving to ensure social justice and protect workers' rights amidst growing economic challenges.
Shocking facts from German customs
In an official response to a parliamentary inquiry from the Left Party, the German Finance Ministry explained that the Customs Service's Financial Control Unit for Combating Illegal Labor (FKS) conducted intensive operations in 2025. The unit carried out a total of 25,765 inspections targeting employers across Germany. These operations resulted in the opening of investigations in 6,121 cases, due to strong suspicions of minimum wage violations.
The methods of fraud detected by the authorities vary, as they are not limited to paying cash wages below the legal rate, but also extend to manipulating attendance records, imposing unpaid overtime hours, or failing to document actual working hours, thus depriving workers of their financial and social entitlements.
Historical context and economic importance
The German Minimum Wage Act (Mindestlohn), which first came into effect in 2015, is a cornerstone of modern German labor policy. It was introduced to end a long era of total reliance on collective bargaining, with the aim of protecting low-income workers and preventing "social dumping." However, persistent violations pose a threat not only to workers but to the economy as a whole, harming fair competition. Companies that violate the law benefit from lower operating costs compared to those that comply, in addition to the losses incurred by social security and tax authorities.
Political criticism and demands for expanded censorship
These figures drew sharp criticism from the opposition, with Cem Ince, a member of parliament from the Left Party, stating that the current measures are insufficient to deter violators. Ince said, "On average, a violation of the minimum wage is detected in approximately 25% of inspections," describing this percentage as high and alarming.
The MP based his argument on estimates derived from employee surveys included in the latest report by the Minimum Wage Commission, which indicate that up to 2.5 million people in Germany may be victims of being denied the legal minimum wage. Enge called for a clear and comprehensive expansion of inspections, emphasizing the need to bolster the Financial Control Unit with additional staff to enable it to more effectively cover the labor market, especially since inspection rates in 2025 remained close to 2024 levels without any significant increase.
The most affected sectors
According to data from the Ministry of Finance, violations are concentrated in specific, labor-intensive sectors. The hospitality and hotel sector topped the list with approximately 2,500 investigations. Other sectors also recorded high numbers, exceeding 500 investigations each, including:
- Transportation and logistics companies.
- Construction and building companies.
- Hairdressing and beauty salons.
Customs also detected numerous violations in the taxi sector, beverage shops, and security and guarding companies, sectors that often experience high employee turnover rates and difficulty in accurate monitoring.
Impact of raising the minimum wage
It should be noted that the minimum wage increased on January 1st, rising from €12.82 to €13.90 per hour. According to the Federal Statistical Office, this increase directly affected 4.8 million jobs in Germany. This means that current customs inspections, while important, cover only a very small fraction of the companies and workers involved, leaving a significant loophole that some employers could exploit to evade their legal obligations.
