Germany Divided Over Minimum Wage | Business| Economy and finance news from a German perspective | DW | 04.03.2006
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Germany Divided Over Minimum Wage

The German government is giving some serious thought to introducing a minimum wage to counter dipping salaries. But agreeing on the amount is proving tricky.

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An increasing number of jobs in Germany pay below-average wages

Madleine Kunkel has got a busy day ahead of her. The 29-year-old hairdresser started work at 7 a.m. in the morning and she's not going to leave the hairdresser's salon where she's employed before 6 p.m. in the evening.

In spite of working long hours though, she said she's hardly able to make ends meet at her current wages of just under five euros ($6) an hour.

"It's really very little," Kunkel said. "Without the income of my husband I wouldn't be able to live just on what I earn. So a minimum wage of six or seven euros an hour would of course be great for me."

Below-average wages cause for co n cer n

Bauarbeiter arbeiten auf einer Baustelle

Wages in various sectors have been dipping

Wages in Germany have been sliding in recent years thus inflating the ranks of the so-called working poor -- people like Kunkel who have full-time jobs but are earning below-average wages.

Economists have suggested that minimum wage levels of around six euros an hour would be enough for people to live on but at the same time would prevent major job losses.

Germany's powerful trade unions believe though that the minimum should be 7.50 euros. Since European Union enlargement towards Eastern Europe they've been forced to accept ever lower wages especially for low and unskilled workers in the service sector of the economy.

According to a recent study of the about 20 million Germans working full-time, a staggering 17 percent earn wages below the subsistence level.

Social Democratic Party leader Matthias Platzeck said that the government must no longer stand by in view of wage developments. He's called on Chancellor Angela Merkel to act.

Frank Bsirske, head of the giant services union Verdi agrees.

"I welcome Mr Platzeck's move in favor of a minimum wage," he said. "We must eventually catch up with other Western European countries such as Ireland, Great Britain or Belgium where minimum wages of between seven and eight euros have been introduced. It's about time that we protect German labor here too."

Germa n employers n ot co n vi n ced

German employers, however, are vehemently opposed to the introduction of minimum wages. They warn that thousands of jobs would be lost.

"There are so many jobs in Germany which are paying less than seven euros that a minimum wage at that level would cost an extremely high number of jobs," said Ludwig Georg Braun, president of the German Chambers of Industry and Commerce. "After all it would mean a violation of German laws governing collective bargaining for wages. I can only warn the government against taking this step."

Die designierte Bundeskanzlerin Angela Merkel waehrend einer Fraktionssitzung in Berlin am Montag, 21. November 2005.

Angela Merkel has promised a public debate on the issue

German Chancellor Angela Merkel, however, seems determined to do something for Germany's working poor. She said she's open for a public debate which, however, should also include the possibility of government subsidies for those earning low wages.

Later this year, after the summer break, her coalition government of conservatives and Social Democrats intends to have appropriate legislation ready.

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