German Chancellor Angela Merkel in Berlin on Monday. (AP Photo/Michael Sohn)
Germany is increasing its minimum wage to €8.50 ($9.83) an hour effective December 1, after the government failed to secure a final agreement on the issue ahead of regional elections in December.
The new agreement is likely to spark further populist discord with Chancellor Angela Merkel’s coalition partners set to argue that Germany’s new minimum wage, which took effect in mid-2015, has helped decrease working hours rather than increase wages.
The argument from the conservative Christian Democratic Union and the pro-business Free Democratic Party is likely to stoke anger among activists at the drop in labor-force participation and migrant contributions to the German wage pool. A research analysis released on Monday by the sociologist Cengiz Aktar found that the share of low-skilled workers in the workforce dropped by 2.5 percentage points after the minimum wage took effect.
While the coalition may take some comfort in the fact that the wage agreement will disproportionately benefit women and women’s-dominated sectors, it’s unlikely to be enough to pacify coalition partners, who are pushing to increase the rate to €10 an hour, arguing that it would help workers struggling with low unemployment rates.
Germany’s government must still agree to the minimum wage before it can take effect in September 2018, when the national minimum wage is set to rise to the European Union average of €8.56 an hour from its current level of €8.20 an hour. Germany had previously paid its minimum wage at the same rate as its neighbors, but the European Union long maintained the practice, known as europont, to prevent any group to slow down productivity in neighboring countries. However, Germany and other countries have since won the right to use their own minimum wage rates as it suits them. Germany’s initial agreement to increase the minimum wage came in 2011.
Read the full story at the BBC.
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