Germany's minimum wage hike will not cost jobs -labour minister

2 minute read

German Chancellor Olaf Scholz gives a statement before a cabinet enclosure at the Chancellery to lay out and discuss Germany's policy plans for its G7 presidency in Berlin, Germany, January 21, 2022. Michael Kappeler/Pool via REUTERS

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BERLIN, Jan 21 (Reuters) - Germany's planned minimum wage hike to 12 euros ($13.61) per hour from October means a pay rise for over 6 million people across the country and should not cost jobs contrary to critics, Labour Minister Hubertus Heil said on Friday.

Increasing the German minimum wage, currently 9.82 euros per hour and will increase to 10.45 euros per hour from July, to 12 euros per hour was one of the key election promises of Chancellor Olaf Scholz and his Social Democrats.

"The minimum wage strengthens purchasing power and leads to the national economy in Germany actually becoming more productive in the long term," Heil told Reuters in an interview.

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"That means we will not have mass job losses. These doomsday scenarios already existed when the minimum wage was introduced. On the contrary, we will have more decent wages in Germany and more purchasing power," the Social Democrat said.

The minister also said the change, which will cost employers 1.63 billion euros in October-December, should benefit especially employees in eastern Germany and women working in service occupations where wages are traditionally too low.

Heil confirmed he had sent his bill to the rest of the cabinet earlier on Friday and does not expect opposition from the Social Democrats' coalition partners Free Democrats and Greens.

"We will probably discuss it in the federal cabinet in February. Then it will go to the German Bundestag so that the minimum wage can be raised to 12 euros in time for Oct. 1. And that is also anchored in the coalition agreement," Heil said.

($1 = 0.8817 euros)

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Reporting by Holger Hansen, writing by Zuzanna Szymanska and Michael Nienaber, editing by Kirsti Knolle and David Gregorio

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