Merkel Signals She’ll Back Minimum Wage as Coalition Nears

Chancellor Angela Merkel signaled that she was prepared to accept a national minimum wage in Germany as the price of securing her third-term government with the Social Democrats.

Merkel’s concession to the party she defeated in Sept. 22 elections removes one of the biggest stumbling blocks to the formation of a so-called grand coalition of her Christian Democratic bloc and the SPD led by Sigmar Gabriel. Top negotiators held a seventh round of talks today and said they made progress on forging a shared government program by Nov. 27.

“I will have to agree to things that I described as the wrong approach in my campaign platform,” Merkel said in a speech today before the talks. “A realistic view of the situation leads very quickly to the conclusion that the Social Democrats won’t conclude these negotiations without” a national minimum wage, she said.

Merkel and Gabriel are both confronting frustration within their ranks over concessions made as the talks enter their decisive phase. While Bild newspaper calculated that Merkel’s bloc has bowed to SPD demands in 10 of 12 main policy areas, the Social Democrats are bridling at the CDU’s refusal to free up funds as it holds fast to a commitment not to raise taxes.

Spending priorities for Merkel’s next four-year term aren’t agree yet and “this isn’t going to be easy at all,” Andrea Nahles, the SPD’s general secretary, told reporters after the negotiations. “Things are coming to a head.” While the talks could collapse, “I’m very optimistic that it can work,” Nahles said.

Nov. 26 Showdown

“It’s hard work, but one does have the sense that with hard work, it will lead to a good result,” Hermann Groehe, her CDU counterpart, said at a joint news conference. Negotiators will meet to try and overcome their remaining differences on Nov. 26, he said.

The chancellor’s goal to have a new government sworn in by Christmas faces a further hurdle as a result of the SPD leadership’s pledge to put whatever accord is reached to a ballot of its members. The result will be announced on Dec. 14, Deutsche Presse-Agentur reported today.

The SPD set a minimum wage of 8.50 euros ($11.50) an hour across Germany as its main condition for entering into coalition. Merkel’s bloc campaigned for wages to be set by industry and labor, with a lower threshold imposed in some industries.

Speaking yesterday, Merkel called the labor-market debate “among the more difficult issues” in the talks. Progress on minimum wages would join agreements reached on matters including energy, quotas for women on company boards, a planned financial- transaction tax and rent controls. The CDU has won the SPD over to its refusal to support euro-area bond issuance.

“I believe that forming a government is the responsible thing to do for Germany,” Merkel said today. “It hasn’t exactly been a hasty process.”