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Germany adopts first-ever national minimum wage

Germany on Thursday adopted its first nationwide minimum wage, hailed as a victory by unions and the centre-left coalition partners of conservative Chancellor Angela Merkel.

BERLIN: Germany on Thursday adopted its first nationwide minimum wage, hailed as a victory by unions and the centre-left coalition partners of conservative Chancellor Angela Merkel.

The base pay of 8.50 euros ($11.60) an hour will eventually benefit more than five million workers in the low-wage sector when it is phased in between January 1, 2015, and 2017.

Ahead of the Bundestag lower house of parliament vote, which passed with a wide majority, Labour Minister Andrea Nahles hailed it as a "milestone" in German labour and social policy.

"What we're deciding today is of outstanding significance for millions of this country's employees, who finally will receive a fair wage," she said.

Introducing a universal minimum wage brings Europe's biggest economy in line with 21 of the EU's 28 member states.

The Confederation of German Trade Unions (DGB) had also welcomed the move after a year-long struggle and rejected as "propaganda" claims that it would destroy jobs.

"The minimum wage won't be a job killer," said its chairman Reiner Hoffmann. "This has been confirmed by serious studies and the experience of our European neighbours and the United States."

Merkel herself had long opposed the minimum wage, warning it could force small- and medium-sized businesses to lay off workers, and favouring instead separate pay deals by industrial sector and region.

But she caved in after tough haggling late last year on forming a "grand coalition" with the Social Democrats, who had promised steps to narrow a growing pay gap in Germany's 42-million-strong labour market.

The starting level, set to be reviewed every two years, is in line with those in other major developed economies: slightly less than France's 9.53 euros, but above Britain's £6.31 (7.91 euros, $10.83).

The Munich daily Sueddeutsche Zeitung labelled it a "historical reform" that would protect workers from "appallingly bad rates of pay", commenting that "people who cut hair, serve beer or slaughter pigs... will feel their work better valued".

German industry groups argue the minimum wage will destroy jobs, especially in the former communist east where a quarter century after the fall of the Berlin Wall, wages are still lower than in Western states.

The government has agreed certain exemptions, such as under-18-year-olds, to encourage them to seek training or an apprenticeship rather than a better-paid job.

Another exception will be people who re-enter the labour market after 12 months or more out of work, who can be paid less for the first six months on the basis that a badly paid job is better than none at all.

The base wage will also be phased in more slowly for newspaper delivery workers and seasonal fruit pickers, to help keep those sectors viable.

Agriculture Minister Christian Schmidt welcomed the minimum wage but warned "the cheapest offers (for fruit and vegetables) will disappear from the market or come from other countries".

The EU's employment commissioner, Laszlo Andor, criticised the exceptions, telling the Welt daily that the minimum pay must apply to all "so that people do not fall into poverty despite having work".

News weekly Spiegel Online said "horror scenarios have been used to illustrate how many jobs will be lost... as if 8.50 euros were an exorbitantly high hourly wage. We're talking about a monthly income of just 1,400 euros."

But the conservative Welt newspaper was critical, arguing the government was sinking the market economy with giveaways to curry votes and that unions were already "eyeing a 10-euro hourly wage".

"The government can now set the pay in all sectors Germany-wide," it said in a commentary. "But how many jobs there will be under these conditions will be decided by the market."

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