Germany introduces new national minimum wage

Germany has introduced a minimum wage for the first time in the country’s history.

Members of the German parliament approved plans to set the least amount of money a person can earn at €8.50 (£6.80) an hour. The Christian Democrats, led by chancellor Angela Merkel, will work alongside the Social Democratic Party (SPD) in a power-sharing deal to place this new policy in place.

Nations such as the UK and US already have a minimum wage in place but Germany’s €8.50 an hour rate is higher than both of these countries. The UK’s rate was revised in 2013 to £6.31 an hour while the US’ Federal government set the nation’s lowest minimum wage at $7.25 (£4.22) an hour. However, a large number of states including California, Florida and New York have a much higher rate.

Germany is currently one of seven countries within the European Union that does not have a minimum wage.

It has previously relied on trade unions and business groups to fix the pay level and the introduction of this new legislation has been a major talking point across the country.

There have been suggestions that it could weaken Germany’s competitive edge and that it could potentially see a downturn in job creation but there are mitigating circumstances surrounding the law. It will not come into effect until 1 January, 2015 giving companies time to phase one in the policy and it will not apply to minors, interns, trainees or long-term unemployed people for their six months at work.

While Germany has introduced a new minimum wage, Switzerland has overwhelmingly rejected a proposal. A referendum carried out in May was to decide whether the country should introduce the highest minimum wages in the world – 22 Swiss francs (approximately £15) an hour.

The results showed a 76 per cent vote against the proposal with critics stating that it would raise production costs and increase unemployment in the country.