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Business

Germans Debate Introducing National Minimum Wage

Germany is one of the few European countries which does not have a minimum wage. But there are moves afoot among the nation's unions to change that.

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Union leader Frank Bsirske promotes the idea.

With relatively generous wages and the shortest working week on the continent, workers in Germany are likely the envy of many of their European counterparts. But unlike their counterparts in many other countries on the continent, they don't have the protection of a statutory minimum wage.

Politicians, employers and union representatives are currently getting tied up in knots over whether they should change the existing system or whether they should seriously consider implementing a wage packet minimum on home ground.

Leading the rallying call for a new system of wage payments is head of the service industry union Verdi, Frank Bsirske. Against a backdrop of new regulations which will slash benefits of the long-term unemployed refusing to take a 'reasonable' job -- this could be poorly paid employment for which the applicant is overqualified or which could require relocation -- Bsirske told Berliner Zeitung that forcing people into jobs they can't live from would put greater pressure on wages. On that basis, Germany should think about introducing a statutory minimum wage, he said.

Reinigungskraft Kombilohn

Cleaners could benefit.

Bsirske received backing from the head of the German trade union federation, Michael Sommer. "Those looking for salvation in a far-reaching low-wage sector will fail in the long-term," Sommer told Fuldaer Zeitung. Further endorsement came from Franz-Josef Möllenberg the head of the food and restaurant workers' union, NGG. "I am convinced it is the right way forward," Möllenberg told Berliner Zeitung on Wednesday, adding that the minimum wage rate should be set at around €1,500 ($1,899) per month. The figure would be top the current high of €1,402 in Luxembourg.

Waves of criticism

Not surprisingly, the latest suggestions have drawn as much resistance as acceptance from employers, politicians and union representatives. German Economics Minister Wolfgang Clement told reporters that he didn't think much of the idea. "As far as I'm concerned, it doesn't make much sense," he said. It's an opinion shared by FDP Chairman, Guido Westerwelle, who believes the introduction of the new wage system would destroy more jobs than it would create.

Dieter Hundt

Dieter Hundt

In an interview with Berlin's Der Tagesspiegel newspaper, the head of Germany's Employers’ Association, Dieter Hundt (photo), warned that standardizing national pay rates would mean to "seriously encroach on the system of collective agreements." He added that the current welfare system in Germany was an "implied statutory minimum wage" in its own right. Hundt further stated that if employment costs were artificially increased through the implementation of a national minimum wage, it would serve only to strip the country of simple jobs.

While the arguments rage one way and the other, the ruling Social Democrats (SPD) have yet to make a decision. Speaking on Germany's public broadcast television ARD, designated SPD leader Franz Müntefering said that discussions were not over yet.

European picture

If Germany is looking to Europe to assess the good and bad effects of a minimum wage, the picture could be confusing. Britain introduced the system in the late 1990s and unemployment has fallen dramatically since then -- a recent Trade Union Council study calculated that some 1.3 million jobs were created in Britain between 1997 and 2003. The monthly rate of €1,124, however, doesn't go far in some parts of the country and low-wage earners find themselves having to take on more than one job to make ends meet.

Kassierin und der Euro

Supermarket cashier.

In France, the national minimum wage dates back to 1950. The system was revamped in the 1970s, and now has between 30 and 40 percent of the nation's workforce, known as smicards, on its books. They earn a monthly wage of €1,215 and are well-respected members of society. Despite this achievement, the system appears not to have served as a lasting cure for unemployment in the Republic.

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