BERLIN (Reuters), German Chancellor Olaf Scholz stated on Saturday that the Social Democrats (SPD), he said, were pushing forward with their election promise of raising the national minimum wage from 12 Euros an hour to 12. It was important to respect low-paid workers.

Hubertus Heil (Social Democrat Labour Minister) presented on Friday a draft bill proposing to raise the floor wage rate from its current 9.82 euro level starting October.

“The minimum wage increase to 12 Euros is an important legislative project for me. This is a matter that shows respect for employees’ achievements. Scholz stated on Twitter that he was glad the minimum wage is now at 12 euros.

According to the labour ministry, the measures will be of benefit for more than 6 millions people in the country. Employers will also see an increase of 1.6 billion Euros between October and December.

Heil stated to Reuters Friday that he believed the shift would benefit workers in Eastern Germany as well women in the care sector or other services, where traditionally wages are low.

Friday’s labour ministry proposal was sent to all departments by the Labour Ministry. Social Democrats expected their junior coalition partners, Free Democrats and Greens, to endorse the bill.

In February the Cabinet is expected to approve the draft law, while parliament is expected adopt the increased minimum wage prior to the summer vacation.

Employer associations claimed that the 20% increase was excessive and threatened to challenge the law. Both Scholz and Heil have rejected claims that an increase in the minimum wage would lead to job losses.

German firms are currently facing severe labour shortages across many economic sectors. Therefore, higher wages can be seen as an opportunity to recruit more foreign workers.

Bundesbank’s central bank warned against the possibility that the plan by the government could increase wages across all sectors and raise overall prices at a time when inflation is already very high in Europe’s largest economy.