Saturday, November 30, 2013

Germany sets Minimum Wage at $11.54, lowers retirement age

Germany sets Minimum Wage at $11.54, lowers retirement age

by fladem
From CNN:
Conservative Chancellor Angela Merkel signed aprovisional government program with the center-left Social Democrats, which secured her a third term in office in exchange for policy compromises. The coalition said it would introduce a minimum wage of €8.50 an hour from 2015 -- a move some experts say could help 17% of the German workforce, mainly in the service sector. Most wages are currently set in negotiations between companies and unions, and there is no statutory national minimum.
Germany will also improve pension benefits -- from July 2014, workers who have paid social security contributions for 45 years will be able to retire on a full pension at 63, two years earlier than currently.
There is much to discuss here. First, it will surprise people here that Germany had no minimum wage before this deal.  One thing to understand about Germany is that for the last 20 years it has been in the process of absorbing the old East Germany.  This process has been monumentally expensive, and it was one argument I heard in Germany (I go there frequently) against introducing a minimum wage.  8.5 EU translates into about 11.54 an hour (versus 7.25 an hour in the US).  This effects a whopping 17% of all German workers - a large group.
It is important to understand when discussing Germany just how much they benefit from the Euro.  If they had their own currency it would have gone up dramatically - and caused big problems for German exports.  This is what drives other Europeans - who have to listen to the Germans drone on endlessly about austerity - mad.  But for the Euro the Germans would be in a far different place than they are now.
Second the lower of the retirement age for workers who have been working since they were 18 is a very usefull lessons for Americans to learn.  One of the more absurd aspects about the retirement age debate is the argument that "people are living longer and want to keep working".  For many professional workers this is probably true - but I doubt many janitors would agree.
More broadly, though, it is important to remember that American workers are actually more productive than their German counterparts by some measures.  Raising retirement ages for pension plans given this is simply a product of the power of the right to create the impression of poverty.
Here is the ultimate lesson to learn: US workers are productive, and the United States is a rich country.  A rich country with productive workers should be talking about lower the retirement age, not raising it.
Changing the discourse around these issues is one of the fundemental challenges for the left of center.
8:34 AM PT: By way of comparison, 26% of private workers in the US make less than 10 an hour.

Originally posted to fladem on Wed Nov 27, 2013 at 07:50 AM PST.

Also republished by In Support of Labor and Unions and More and Better Democracies.

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