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Germany – National minimum wage agreed in coalition deal

27 November 2013

Following 17 hours of tense negotiations, Angela Merkel’s Christian Democrats Union (CDU) and the Social Democrat Party (SPD) have come to an agreement on forming a coalition government. This agreement comes more than two months after elections in Germany declared Mrs Merkel’s party the non-majority victor.

One of the biggest hurdles for the two parties to overcome was the issue of a minimum national wage. The SPD have been vocal in their demands for an hourly minimum wage, stating that the issue was non-negotiable. It has been agreed by the two parties that a national minimum wage of €8.50 will be introduced across Germany in 2015.

The final agreement is contingent on a ballot of the SPD members, with the result expected on the 15 December. Should the coalition deal be approved, Mrs Merkel will be sworn in for a third term in office.

Unlike most European Union countries, Germany has resisted a minimum wage, in part because it was seen as political interference in wage bargaining between unions and employers. Instead it relies on collective wage deals by sector and region.

However, because wages in neighbouring Poland and the Czech Republic are lower, some fear companies in eastern states could move their operations across the border to keep labour costs down.

Staffing Industry Analysts does not expect a national minimum wage to have a large effect on temporary workers however, given that minimum wages, especially for higher-skilled workers are higher than €8.50 per hour already and because many blue collar industry sectors have collective bargaining agreements in place already establishing a minimum rate.

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