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The next German government should boost flexibility in the labour market, the head of the Bundesbank, Jens Weidmann, said in an interview published on Sunday, making it easier to fire employees and creating more incentives to work.
Less job protection should be combined however with better packages for those laid off, he told newspaper Die Welt am Sonntag. “My concern is not how to eliminate the protection against dismissal. It depends on the total package. Companies need enough room to manoeuvre and planning security, workers at the same time need to be sufficiently protected.”
Sweeping labour and welfare reforms introduced by Chancellor Angela Merkel's predecessor, Gerhard Schroeder, had boosted flexibility, Weidmann said, but focused on particular areas of the labour market; such as temporary workers or part-time workers.
Regarding the absence of a national minimum wage in Germany he added: “I view minimum wages sceptically. For poverty reduction, for example, it is a very imprecise instrument... A politically defined minimum wage would certainly make greater increases that would be appropriate for the labour market. That would just hurt those you really want to protect; the low-skilled. If you want to introduce a general minimum wage I strongly advise depoliticising it. Thus, the legal minimum wage, for example in the UK, is not fixed by Parliament or by the government, but by an independent commission.”
This month it was announced that an agreement had been reached between the confederation of German Trade Unions and the employer’s association of the temporary staffing industry to increase the minimum hourly wage through to 2016.