Germany will give almost two million workers a 25% salary increase
(CNN Business) - Almost 2 million workers in the largest economy in Europe are prepared for a large salary increase.
Three German political parties agreed to form a new government on Wednesday, and left -wing social democrat Olaf Scholz will replace Angela Merkel as chancellor after long coalition negotiations.
As part of the coalition agreement, the country plans to increase its minimum wage to 12 euros (US $ 13.46) per hour, from the current rate of 9.60 euros (US $ 10.77) the time.
The measure could increase the income of almost 2 million people in Germany who earn a minimum wage, or around 5% of workers, according to Carsten Brzeski, an Ing economist.He said the measure was "clearly significant".
The minimum wage was already scheduled to rise to 10.45 euros (US $ 11.72) in July 2022.The text of the coalition agreement does not indicate when the greatest unique increase will enter into force.
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UBS economist Felix Huefner said the measure should "boost general salary growth" in the German economy, while warning that it could "contribute to broader salary pressures".
The aggressive Central Bank of Germany took the unusual measure of publicly criticizing the measure this week, qualifying it as "worrying".He said he would have a chain effect on the salaries of those who earn more.
Inflationary pressure
Economists and those responsible for the formulation of policies around the world have closely observing the increase in wages as a key component of inflation.In Germany, inflation in October stood at 4.5%, the highest measure in almost three decades, since energy prices shot and the cost of food rose.
Germany first introduced a national minimum wage of € 8.50 (US $ 9.54) in 2015.
Support for minimum wages in Europe has grown as the power of unions has decreased.The European Commission says there was a fall in the proportion of EU workers covered by collective agreements between 2000 and 2015, with particularly strong falls in Central and Eastern Europe.
A new EU bill announced earlier this month seeks to strengthen minimum wages throughout the block with new requirements.
"During the previous crisis, lowering minimum wages and dismantling sector collective bar."Now, we fight to increase legal minimum wages and strengthen collective bargaining in Europe".
Germany's minimum wage is already among the highest in the European Union.
