Germany is set to introduce a national minimum wage, conservative Chancellor Angela Merkel said on Thursday, relenting on a key demand of her likely future centre-left governing partners.
"The Social Democrats will not conclude negotiations without a universal legal minimum wage," she said about ongoing talks to form a 'grand coalition' government, adding that her party had opposed such a move and would do its best to prevent job losses as a result.
The centre-left SPD made introducing a national minimum wage of €8.50 an hour one of the key demands in their coalition negotiations with Merkel's conservatives.
But Merkel and her party had opposed the scheme, arguing that it would cause job losses. They argued that individual industries and regions should decided their own minimum wages instead.
Currently a patchwork of pay deals has set minimum wages for a dozen industrial and service sectors, including cleaners, electricians and security guards.
Minimum wage levels are often higher in western states than in the economically weaker states of the former East.
In the run up to the election on September 22nd, in which both the SPD, Green Party and Die Linke campaigned for a minimum wage, horror stories emerged about employers taking advantage of not having to pay a minimum wage.
Job centres in the state of Mecklenburg Western-Pomerania reported office workers receiving €1.37 an hour, a delivery driver on €1.55 an hour and a receptionist on €2.54 an hour.
In one case a hotel maid in Mecklenburg-Vorpommern was paid 26 cents an hour, newspaper the Welt reported.
According to a poll in October, 83 percent of Germans supported introducing a minimum wage.
In the coalition talks, SPD chief Sigmar Gabriel, Merkel's likely future vice chancellor insisted on nationwide minimum wage to help Germany's growing army of working poor.
The country has a jobless rate of just 6.9 percent. But, according to the DIW economic institute, 5.6 million Germans, or 17 percent of the workforce, now earn less than €8.50 an hour, especially low-skilled and part-time workers.
But the conservatives remained opposed. "The fixed minimum wage ruined East Germany," charged the conservative state premier of eastern Saxony-Anhalt, Reiner Haseloff, referring to the former communist government. "We must not make the same mistake."
The new president of the BDA employers' association, Ingo Kramer, said thatwhile 'poverty wages' are "unacceptable", in some cases "there are good reasons" for low hourly wages.