Germany To Introduce National Minimum Wage In 2015
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Germany’s cabinet have signed off on a bill to introduce a national minimum wage of 8.50 euros ($11.75) an hour starting next year, moving away from their traditional wage structure – in place for decades – where businesses and trade unions would agree on pay and working times in collective agreements.
The bill had been a flagship project for the Social Democrats (SPD) who currently share power with chancellor Angela Merkel’s conservatives Christian Democrats (CDU).
Germany’s cabinet have signed off on a bill to introduce a national minimum wage of 8.50 euros ($11.75) an hour starting next year, moving away from their traditional wage structure – in place for decades – where businesses and trade unions would agree on pay and working times in collective agreements.
The bill had been a flagship project for the Social Democrats (SPD) who currently share power with chancellor Angela Merkel’s conservatives Christian Democrats (CDU).
Targeting nearly five million German workers – who currently earn less than the stated amount – the minimum wage is expected to into place in 2015, with a two-year transition period given to existing regional and sector-wide wage deals.
[quote]”There are far too many people in Germany who have to work for inappropriately low wages and don’t participate sufficiently in the good economic situation,” said Labour Minister Andrea Nahles from the SPD. “In future, there will be fair pay. From now on, work is no longer a sales good.”[/quote]At least 3.7 million employees are expected to get a immediate wage increase starting from January 1, 2015. Some employers can continue to pay their workers less until the end of 2016 if they are covered by certain collective agreements.
Companies will also be able to pay the long-term unemployed less than the legal minimum wage for the first six months of a new job.
Critics of the bill, such as Deutsche Bank and the Ifo economic institute, however have warned that the minimum wage could lead to the loss of 900,000 jobs, many of them part-time, or the equivalent of roughly 340,000 full-time jobs.
Government officials have said that former East Germany with its lower wage and higher unemployment levels will likely be hit hardest by the new minimum wage.
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Nonetheless, the bill is certainly popular among the electorate. In polls in the run-up to last September’s election, more than 80 percent of voters were in favour.
Several economists also believe that rising wages could help stimulate domestic spending in Europe’s biggest economy and thereby the continent as a whole.
Of the 28 member states in the EU, 21 have minimum wages.
