A Minimum Wage for

Abstract

A key component of the coalition agreement between the CDU/CSU and SPD signed on November 27 is the adoption of a minimum wage for Germany. Under the agreement, a statutory minimum wage of €8.50 per hour will be introduced across the country starting in 2017. Pushed as a make-or-break issue by the SPD during the negotiations, its introduction follows months of heated debate about its desirability and potential consequences. Although economists have yet to reach a consensus on the issue, the recent experience of the UK provides some valuable insights about what we should expect from the introduction of a minimum wage in Germany. Overview Germany is one of a handful of OECD countries that does not have a national statutory minimum wage. In the past, minimum wage legislation has been industry-specific, the outcome of generalising collective-bargaining agreements by unions and employer associations. While this decentralised approach enjoyed wide-ranging support for several decades, concerns about the growing number of low-wag