Germany to broaden minimum wage sweep

Germany is planning a minimum wage for millions of workers earning as little as €3 an hour, although analysts said it might not be effective in cutting poverty.

Leaders of Chancellor Angela Merkel’s ruling coalition on Tuesday agreed to extend an existing law that enforces a minimum wage in the building industry to up to a dozen other sectors, including hairdressers and farm workers.

The step falls far short of the demand by the Social Democrats – coalition partner to Ms Merkel’s Christian Democrats – for a national minimum wage covering all workers.

Unlike about 20 other European countries, Germany has no universal minimum wage, due largely to the traditional focus on collective bargaining as the key wage-setting mechanism.

About 2.5m people would benefit from a minimum wage, trade unions argue.

Under the deal struck on Tuesday, employers and trade unions would define a bottom-line wage for all companies in a sector – but only in those where 50 per cent of employees are covered by collective agreements.

German unions want a minimum of €7.50 an hour.

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