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Germany increases national minimum wage despite coronavirus crisis

BERLIN, Oct 28 (Reuters) - Chancellor Angela Merkel’s government agreed on Wednesday to increase Germany’s national minimum wage in four stages, reaching 10.45 euros ($12.35) per hour by mid 2022, as part of its effort to support domestic demand in Europe’s largest economy.

The increase, which had been proposed by a commission in June, marks the fourth increase of the national minimum wage. It came despite calls from employers to leave it unchanged because of the economic crisis triggered by the coronavirus pandemic.

First set at 8.50 euros per hour in 2015, the minimum wage was raised in 2017 to 8.84 euros and then in 2020 to the current 9.35 euros.

The cabinet agreed the draft law by Labour Minister Hubertus Heil from the co-governing Social Democrats (SPD). It will raise the minimum wage to 9.50 euros from January 2021 and to 9.60 euros from June 2021. It will then increase to 9.82 euros from January 2022 and finally to 10.45 from June 2022.

The increase will benefit some 2 million people working in Germany’s vast low-wage economy, with jobs ranging from catering to parcel delivery.

The centre-left SPD was the driving force behind the introduction of the wage floor during the last legislative period.

Finance Minister Olaf Scholz, who is running as SPD chancellor candidate in next year’s federal election, has called for the minimum wage to rise even higher, to 12 euros per hour.

The SPD is keen to raise its profile on social justice before the election after suffering humiliating losses in past elections. But it’s struggling to attract voters and polls see the party far behind Merkel’s conservatives and the Greens.

Germany is in the top third of European countries when it comes to minimum wages - in early 2020, EU minimum wages were higher only in Luxembourg, France, the Netherlands, Ireland and Belgium.

$1 = 0.8461 euros Reporting by Michael Nienaber, editing by Larry King