German minimum wage to exclude long-term unemployed - sources

BERLIN, April 1 Tue Apr 1, 2014 11:16am EDT

BERLIN, April 1 (Reuters) - Germany's governing coalition has agreed the outlines of an 8.50 euro ($12) per hour minimum wage to be introduced next year, covering all but the roughly one million long-term unemployed, sources close to the talks said on Tuesday.

Under the deal, companies can pay the long-term unemployed less than the legal minimum wage for the first six months of a new job, a concession conservatives in the coalition had pushed for.

Labour Minister Andrea Nahles, a member of the Social Democrats (SPD), had intended the exemption to apply only to those long-term unemployed whose employers received subsidies for them - fewer than 20,000 people a year in previous years.

Germany's right-left cabinet, made up of Chancellor Angela Merkel's conservatives and the SPD, is expected to agree on the compromise at a meeting on Wednesday and the law is meant to go through Bundestag lower house of parliament by July.

The planned nationwide minimum wage is a signature deal of the coalition following last year's election, from which Merkel emerged victorious. But employer lobbies have denounced the plan, saying it would cost jobs and introduce too much regulation.

Of the 28 European Union countries, 21 have minimum wages, the latest data shows. EU states without minimum wages tend to have smaller low-wage sectors than Germany and a bigger proportion of their workers are covered by collective wage deals between unions and employers.

The proportion of workers covered by such deals in Germany has fallen to 59 percent of the workforce from more than 70 percent in 1998, according to the trade union-funded Hans Boeckler Foundation.

Other countries have made the minimum wage lower for young people and apprentices to help those with limited experience or skills find work.

The deal is likely to apply to workers from age 18, even though employers wanted it to apply only to workers aged 21 or older.

Slightly more than a tenth of workers in western Germany earn less than the proposed 8.50 euros an hour, compared with a quarter of workers in eastern Germany, according to data from the IWH institute. (Reporting by Holger Hansen, writing by Annika Breidthardt)

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