Germany Serious About Minimum Wage
February 24, 2006
An announcement by Germany's labor minister, Franz Müntefering, that he was ready to introduce a minimum wage bill to parliament later in the year has sparked heated debate in political Berlin.
Unions have rushed to call for a high wage, while business leaders slam the idea as another job-killing proposal by Germany's ruling coalition of conservatives (CDU/CSU) and Social Democrats (SPD). Unlike most European countries, including France, Great Britain and Spain, Germany doesn't have a minimum wage. Each industry sector negotiates wages separately through collective bargaining, but advocates say the government needs to step in to help those earning below-average wages.
"We can't continue to look on, when there are entire sectors where there are wages that don't provide a secure livelihood," said Matthias Platzeck (photo), the head of the Social Democrats, referring to nearly 2 million Germans who have full-time jobs, but nevertheless live below the poverty line.
Six euros for some too little
At the moment, only the construction industry has minimum wages. Unqualified workers earn 7.15 euros ($8.53) and the scale goes up to 10.20 euros an hour. Exactly how much the minimum wage should be across different industry sectors is still up for debate.
Experts from the SPD and the CDU/CSU, which has warmed to the idea, have settled on 6 euros an hour, the first time they've named a figure in the months the minimum wage debate has taken. But some unions say they aren't willing to accept anything below 7.50 euros, which would give workers a monthly wage of 1,300 euros before taxes. Germans earn an average of 2,640 euros a month, according to 2004 statistics released this week.
"People should be able to live," said Franz-Josef Möllenberg, head of the union representing the hospitality industry.
Minimum wage costs jobs
An unlikely group of critics is against the concept, for different reasons. Hubertus Schmoldt, the head of IG BCE, which represents the chemical, mining and energy industry, said a minimum wage would mean the end of collective bargaining -- one the most powerful tools of Germany's unions.
At the moment, there are 3.4 million people earning less than 1,500 euros, 2.6 million earning less than 1,300 euros, and 1.3 million earning less than 1,000, said Dieter Hundt, president of Germany's employers association. The rates work out to a minimum of 6.10 euros an hour. Bringing that wage down any further would endanger millions of jobs, said Hundt.
"We don't know of any minimum wage or combined wage model that doesn't cost jobs, or where costs get out of control, or both," said Ludolf von Wartenberg, of the Federation of German Industries (BDI), in Berlin's Tagesspiegel daily.