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SPD Expands Labor Demands as Talks on German Coalition Near End

Germany’s Social Democrats widened demands on workers’ pay in the last 72 hours of coalition talks with Chancellor Angela Merkel’s bloc, prompting industry fears that the country’s labor-market rules are being unraveled.

Speaking at an IG Metall union conference in Frankfurt yesterday, SPD Chairman Sigmar Gabriel said he wants Merkel’s Christian Democrats to agree to broader regulation of workers’ pay after securing support for a national minimum wage. Groups including the CDU’s industry wing and the BDA employers warned that the labor market may return to a sclerotic past.

“Naturally there won’t be a coalition contract without a legal national minimum wage of 8.50 euros, but in honesty, that’s too little for me,” Gabriel told union delegates. Three days before a self-imposed talks deadline, reforming the temporary work sector and closing union pay deal exemptions “must be central aspects” of bartering with Merkel, Gabriel said.

He and other SDP leaders are scrambling to leverage labor market policy concessions from Merkel’s bloc that exceed a “red line” minimum wage accord. The SPD will ballot its 470,000 members in December asking them to approve a coalition with the CDU and its Christian Social Union Bavarian affiliate, which Gabriel concedes is “unloved.”

A minimum hourly wage of 8.50 euros ($11.52) would bump up the pay of 17 percent of Germany’s 42 million employed people, the German parliament’s scientific panel said in a paper published Nov. 18 that cites a forecast of the DIW economic institute. Germany’s low-pay sector is “one of the largest in Europe,” the study said.

Time Available

The three-party courtship has dragged on for almost two months, leaving policy decisions such as one on Europe’s banking union and on youth unemployment in the euro area on the back burner. The CDU-CSU has defended its own red lines in talks that started shortly after the Sept. 22 national election by blocking moves to increase tax and federal debt.

The SPD must use time available to the Nov. 27 deadline to win approval of its election campaign vows, Gabriel said. About 30 percent of eastern German companies are exempt from pay accords brokered by unions and employers, he said. Companies are exploiting workers with temporary contracts, Gabriel added.

CSU Chairman and Bavaria Prime Minister Horst Seehofer said in Munich on the weekend that negotiations had shifted from whether the SPD wins its demand for a minimum wage to who would be exempted and when the minimum would be implemented.

“There will be a minimum wage with a grand coalition,” Seehofer said. “But we have to ensure that the minimum wage is introduced in such a way that as few jobs as possible are endangered. That is our task.”

‘Alarm Footing’

In a letter sent to Merkel last week, the CDU’s Economic Council, or industrial wing, said it was “on an alarm footing” as the coalition talks threatened to roll back labor-market reforms, Frankfurter Allgemeine Zeitung said today in an advance-release report.

Germany posted record unemployment of more than 5 million in 2005 before the tally dropped after an easing of rules on firing and cuts in unemployment benefits helped price workers back into jobs.

Leaders from Merkel’s bloc and the SPD are set for “difficult days” before the coalition talks close, Seehofer said.

To contact the reporters on this story: Brian Parkin in Berlin at bparkin@bloomberg.net; Patrick Donahue in Berlin at pdonahue1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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