As the New Year approached, Berlin bakery worker Jessica Arendt was not just looking forward to the fireworks.
This year, she said, “I’ll be able to afford a few more things.”
A national minimum wage comes into effect in Germany today, and that means an additional 1 euro (US$1.30) an hour for the 23-year-old.
Mathias Moebius, a bakery chain owner, is not quite so happy.
He says he will have to put up prices in response.
German Chancellor Angela Merkel last year signed off on the country’s first national minimum wage, an idea she had long opposed.
In the past, Merkel favored separate pay deals by industrial sector and region, saying that a national minimum wage would harm many small and medium-sized businesses and could force them to lay off workers.
However, her coalition partners, the center-left Social Democrats (SPD), were adamant that they would only enter into a power-sharing deal if Merkel and her conservative Christian Democrats (CDU) agreed to the fixed basic wage to help Germany’s growing army of working poor.
So, after long and tortuous negotiations, the two sides finally agreed to start phasing in a minimum wage from today. Arendt will now receive 8.50 euros per hour before tax, one of about 3.7 million people the Federal Labour Agency predicts will see a fatter pay packet.
For Moebius, whose bakery chain numbers about 45 stores in Saxony State, more than 300 employees will be affected.
Moebius acknowledged that it would be good for his workforce in principle.
“It will bring the financial remuneration for working in a personnel-intensive sector like the food industry more into line with other sectors,” he said. “It may even improve the image of our industry.”
However, for a family-run business like his, it would also mean a 10 percent rise in costs, which he would have to recoup elsewhere, he said.
Economists say that if there are price rises in other sectors, if taxis and hairdressers also put up their prices, then Arendt and the millions of other low-wage earners will soon find themselves out of pocket as quickly as before.
In Berlin, Ahmet, a 58-year-old taxi driver who is paid per ride, not by the hour, also expressed concern.
“I’ll probably have to pay more taxes and welfare charges. So the effect on my pay will be negative rather than positive,” he said.
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