Minimum Wage

Peter Struck, head of the SPD's parliamentary group, said that the party's strong stance on the issue will take center stage in three upcoming regional polls. In the state of Hesse, one of two states going to the polls on Jan 27, the SPD is to begin collecting signatures in favour of a statutory minimum wage.

"We will start petition drives during the state elections next year. Then the voters will have their say," Struck told daily Bild. "We will turn these regional elections and the general election in 2009 into a referendum on the minimum wage," he added.

The view was echoed by SPD acting Vice Chairwoman, Andrea Nahles this week when she said a national minimum wage will be one of the top goals of her party in the coming year.

"The SPD wants an overall minimum wage. We will not budge from this," said Nahles.

Crucial campaigning tool

Trailing in most national polls by about ten percent, the SPD believes that their support of a minimum wage will be a winning strategy as they look ahead into 2008 and general elections in Sept 2009.

Although they are political rivals, the SPD and Chancellor Angela Merkel's conservative Christian Democrats (CDU) have been ruling together at the federal level in a "grand coalition" since Sept 2005.

The SPD's across-the-board support of a national minimum wage is part of the party's larger campaign to distinguish itself from Merkel's CDU in upcoming elections.

In an effort to reach out to leftwing voters and cashing in on a groundswell of popular feeling on the issue, the SPD has also opposed soaring executive pay against the backdrop of stagnating disposable income for most ordinary workers.

Germany is one of only five European Union countries without a statutory minimum wage. The SPD is pushing for the minimum hourly rate to be set at 7.50 euros ($10.77).

Conservatives oppose statutory minimum wage

The issue of a national minimum wage has been simmering ever since Chancellor Angela Merkel's coalition government approved a 9.80 euro per hour minimum wage for the postal sector this fall. It was the SPD, the junior partner, that drove the change to the law with members of Merkel's CDU and business opposing it.

Many in the CDU fear that a statutory minimum wage would drive jobs out of Germany to Eastern Europe and Asia.

Economy Minister Michael Glos of the Christian Social Union (CSU), the Bavarian sister-party to Merkel's Christian Democrats, warned that a minimum wage would lead companies to cut back on legitimate staff and force workers to take illegal jobs.

"Production and services would move abroad," Glos told weekly newspaper Die Zeit.

Germany's Ifo economic institute estimates that the minimum hourly rate of 7.50 euros demanded by the SPD would cost the economy up to 1 million jobs.

The minimum wage deal in the postal sector has triggered calls for speedy minimum wages by top representatives in sectors such as temporary work, security and garbage disposal. However, they want to set the wage ceiling significantly lower than the 9.80 euros per hour in the post industry.

Volker Enkerts, president of the national association of temporary work, said this week he planned to open negotiations with the unions for a minimum wage in January.

"Temp work quickly needs a sector-specific minimum wage," Enkerts told daily Frankfurter Rundschau. Most industry heads however are unwilling to go beyond 4 to 5 euros per hour.

Low minimum wage will not hurt economy

Many economists point out that a low universal minimum wage would be less damaging to the economy than the sector-specific approach favored so far by Merkel's party. The construction sector and office cleaning are already subject to minimum wage legislation.

Last week, Bert Rürup, chairman of the "council of wise men" -- five highly regarded academics who advise the government on economic policy -- came out in favor of universal hourly minimum wage of 4.50 euros last week.

Economist Peter Bofinger, who is part of the council, told Frankfurter Rundschau recently that "Germany would be significantly better off if wages in the past years had risen by one percent per year."

He denied that higher personnel costs would weaken exports, arguing that even if wages were five percent higher right now, it would make German exports more expensive by just one percent.

Some members of the CDU too believe that a national minimum wage is inevitable.

"Germany cannot ignore the fact that 22 of the 27 countries in the European Union have a minimum wage," Lower Saxony state premier Christian Wulff of the CDU told Die Welt newspaper.