Germany's Cabinet Adopts Minimum Wage Bill

BERLIN—Germany’s cabinet Wednesday adopted a bill to introduce a statutory pay floor of €8.50 ($11.72) an hour, marking a turning point in the wage policy of Europe’s largest economy that for decades let business groups and trade unions set pay and working times in collective agreements.

The measure, which targets the five million German workers who currently earn less than €8.50 an hour, will be introduced in 2015 with a two-year transition period given to existing regional and sector-wide wage deals.

“There are far too many people in Germany who have to work for inappropriately low wages and don’t participate sufficiently in the good economic situation,” said Labor Minister Andrea Nahles. “In future, there will be fair pay. From now on, work is no longer a sales good.”

The ministry expects that 3.7 million employees will get higher wages on Jan. 1, 2015.

The minimum wage won’t be applied to people under 18 and during the first six months that a long-term unemployed is in a new job, according to the draft bill, which the government expects to be passed by the lower house of parliament in July and by the upper house in September.

The planned minimum wage has proved to be popular in Germany, which is one of only seven countries in the 28-member European Union without such a wage floor. When German Chancellor Angela Merkel’s new coalition proposed the minimum wage following elections last fall, more than 80% of Germans welcomed it.