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Germany – Coalition negotiations on minimum wage face criticism

23 October 2013

Economists have warned that there could be serious consequences for the labour market should the Social Democrats (SPD) prevail in their coalition negotiations with their labour market and collective bargaining agreement demands, reports die Welt.

The SPD’s demand to ban fixed-term contracts is also, “the worst possible violation of employment rights”, said Reinhard Goehner, the CEO of the Confederation of German Employer’s Association (BDA).

Leading union officials have already suggested that the ten-point non-negotiable action plan of the SPD contains insurmountable obstacles. The introduction of the €8.50 minimum wage would undermine 41 collective agreements that have been negotiated with the Confederation of German Trade Unions (DGB). Unions have also pointed out that the introduction of the minimum wage could result in increased unemployment.

Dieter Hundt, President BDA, said that the statutory minimum wage: “would be a hurdle that many people will find it impossible to overcome and enter the job market.” It is feared that those affected by the changes will be the most vulnerable i.e. the low-skilled and the young.

He continued: “In all European countries where minimum wages are widespread, we can see the negative consequences. There is high long-term unemployment and also youth unemployment. It is incomprehensible why Germany, where the employment situation is better than in other developed countries, should imitate the mistakes of others.” 

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