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Germany minimum wage adopts a 12-euro-per-hour

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On Friday, the German parliament enacted legislation raising the minimum hourly wage to 12 euros ($12.85), fulfilling Chancellor Olaf Scholz’s campaign promise from last year.

The legislation passed with a huge majority in the Bundestag lower house, with support from both the ruling centre-left coalition and the far-left Linke party. The CDU, a conservative party, and the AfD, a far-right party, both voted no.

A total of 6.2 million people will be affected by the one-third hike, out of a working population of 45.2 million.

The minimum salary will rise in two stages under the law, from 8.82 euros to 10.45 euros on July 1 and then to 12 euros on October 1.

Hubertus Heil, the Labour Minister, described the decision as a “matter of respect” for hard labor, claiming that it would result in the “largest pay boost of their lives” for low-wage workers.

The reform, which was a centerpiece of Olaf Scholz’s election campaign program in September, is not without its detractors.

Some experts believe it will exacerbate wage and price pressures at a time when inflation is already extremely high.

Consumer prices jumped 7.9% in May, setting a new post-reunification high for Germany, owing to rising energy costs.

According to a recent survey of 800 enterprises conducted by the commercial foundation Familienunternehmen, 89 percent of CEOs are concerned about a wage-price spiral.

Sectors that are already under pressure from rising raw material prices are particularly concerned.

The agricultural business organization DBV has warned that the wage raise will have a “massive” impact.

Others contend that the measure’s hazards are more restricted.

In a piece, Marcel Fratzscher, president of the powerful DIW economic institution, stated that reasonable compensation increases were needed to “stabilize the economy.”

Unions, on the other hand, are pressing for even higher pay raises to keep up with the rising cost of living.

According to Yasmin Fahimi, the head of the German trade union organization DGB, temporary inflation is “not as detrimental” to the state as the loss of purchasing power for employees.

New pay agreements are being negotiated by workers in a range of industries.

Thousands of steelworkers went on strike in recent days to demand a rise of 8.2 percent.


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