With eye on elections, Merkel pushes minimum wage

BERLIN Wed Apr 25, 2012 1:38pm EDT

German Chancellor Angela Merkel (C) and pupils pose for pictures at the Girls Day career event at the Chancellery in Berlin April 25, 2012. REUTERS/Thomas Peter

German Chancellor Angela Merkel (C) and pupils pose for pictures at the Girls Day career event at the Chancellery in Berlin April 25, 2012.

Credit: Reuters/Thomas Peter

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BERLIN (Reuters) - German Chancellor Angela Merkel's conservatives have agreed plans to introduce a mandatory minimum wage for sectors of the economy that do not already have one, in the latest policy shift to try to win over left-leaning voters before next year's election.

Merkel's Christian Democrats (CDU) have long opposed a blanket minimum wage, arguing that it would amount to excessive political interference in the wage-bargaining process between workers and employers.

But the CDU came out in favor at a party congress late last year and, after talks with its Bavarian sister party, the Christian Social Union (CSU), agreed a blueprint on Wednesday that was unveiled by Labour Minister Ursula von der Leyen.

According to the plans, a non-partisan committee of employers and employees would be set up to set a nationwide minimum wage and monitor it annually. Industries that already have a minimum wage would not be affected by the new national measure.

Von der Leyen told reporters the initiative could give the CDU an "enormous boost" in an important election in Germany's most populous state of North Rhine-Westphalia next month.

The CDU and CSU will now open negotiations with their junior coalition partner, the Free Democrats (FDP), with a view to putting together a draft law later this year.

The business-friendly FDP is generally opposed to the idea of a minimum wage, but even if Merkel cannot convince them, her attempt to introduce it could help neutralize what had been expected to be one of the opposition Social Democrats' (SPD) main campaign themes in the federal election in 2013.

The minimum wage reversal is the latest example of Merkel co-opting the policies of the centre-left SPD and Greens to bolster her own party's attractiveness to centrist voters.

Since first coming to power in 2005, she has pushed her party to focus on environmental, education and childcare policy, traditional domains of the left.

Last year, in her biggest and most sudden policy shift, she dropped her longstanding support for nuclear power following the Fukushima disaster in Japan, shutting down over half a dozen older German plants and accelerating a nationwide phase-out plan.

EMPLOYERS UNHAPPY

Although they have proven politically adroit, Merkel's policy changes have been controversial with traditionalists in her party and the minimum wage plan was sharply criticized by the leading employers association, which is closely allied with the CDU on most issues.

"The damaging consequences of these kind of solutions can be seen in other European countries that have put in place similar rules," said BDA President Dieter Hundt. "Above all, the weakest will suffer from this because it will make their entry into the labour market more difficult."

Although German unemployment is at its lowest level since reunification in 1990, data from the German Labour Office shows that the low wage sector grew three times as fast as other employment during Merkel's first five years in power.

This has left her vulnerable to accusations that some Germans have not fully benefited from the strength of Europe's largest economy.

Germany has long had minimum wages in place in specific industrial sectors, but not a national measure, as exists in many other western countries like the United States or France.

In a paper unveiled at their party congress in Leipzig last year, the CDU said the level of a new minimum wage should be in line with what is already in place for part-time workers -- 7.79 euros per hour in western Germany and 6.89 euros in the east.

(Reporting by Noah Barkin and Holger Hansen; Writing by Noah Barkin; Edited by Stephen Brown)

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