The political deal to introduce it in Germany has left out the young and the long-term unemployed, reports TOM GILL
The German parliament has approved the country’s first minimum wage but unions and critics on the left are not much impressed.
The wage — backed by a vote in the Bundestag earlier this month — will be set at €8.50 (£6.80) per hour, which is higher than the equivalent in the US and Britain.
Angela Merkel’s Christian Democrats approved the new policy as part of a power-sharing deal with the Social Democratic Party (SPD).
Germany has previously left it to trade unions and business groups to fix minimum pay instead. The country is currently one of seven in the 28-nation EU without a minimum wage.
The minimum wage has been the subject of much controversy in Germany, despite the fact that it has the highest inequality of wealth in the single-currency bloc with, on average, a board member in one of Germany’s top 30 DAX-listed companies earning €3.2 million (£2.54m) a year.
Many have been angered over a watering down of the original proposals, including a two-year grace period for some employers to phase in the policy. Additionally, the wage does not cover minors, interns, trainees or long-term unemployed people for their first six months at work.
The Greens and Left Party voiced the most criticism over the exception for people under 18 years of age and long-term unemployed people during the first six months of starting a job.
Labour market expert Klaus Ernst from the Left Party said his party has fought for years to implement a wage floor in Germany. “But why do they make the minimum wage as abysmal as it is in this law?” he asked.
It is not right that a 17-year-old cashier must work for five or six euros per hour while an older colleague receives €8.50, he added.
Green politician Brigitte Pothmer agreed with Ernst, arguing that with these exceptions from the minimum wage, the young and recently unemployed had been “sacrificed on the altar” to keep the peace within the coalition.
The unions have also expressed their opposition to the way the minimum wage has been implemented.
“With the high number of exemptions, the coalition has brutally amputated the minimum wage,” said the head of the powerful Verdi trade union, Frank Bsirske, while the DGB union has said that not a single wage recipient should be left worse off due to age, gender, social origin or societal situation.
A big part of Germany’s apparent economic miracle has been down to cuts in wages driven through under the “flexible” labour reforms of the social democratic government of Gerhard Schroeder in the early noughties. This kicked off a disastrous process of beggar-thy-neighbour deflationary wages cuts across the eurozone that continues to today.
German unions, encouraged by their counterparts in southern Europe, have been trying to reverse this, arguing that the workers across Europe, from north to south, need substantial pay rises to drag their economies back onto a path of sustainable growth.
Meanwhile corporate lobbyists in the EU’s great power have been warning that a minimum wage would result in fewer jobs, or force companies to move production facilities to other countries where labour is cheaper. They have also claimed that the policy would make Germany less competitive. Such claims about the damage to the German economy should be taken with the same seriousness as the claims by fat cat bosses in Britain ahead of the introduction of a minimum wage in 1999 — when it turned out that the opposite happened.