Friday, February 22, 2013


German strikers in may 2012.(Photo taken from the German Christian Metal Trade Union CGM )

America and Germany want to raise the minimum wage to fight poverty. Opponents fear that a higher minimum wage will destroy jobs.

Germany is the major economic example in the European Union. Southern European states, but also northern countries such as the Netherlands, look enviously to the German economic growth. Unlike the Netherlands and many other European countries, Germany has no minimum wage. That has to change, before the elections in September, says the German Christian Democratic Party (CDU/CSU).

The Christian Democratic Party sees the minimum wage as the best way to fight poverty. Currently, 6 to 8 million Germans are working for less than 8 euros per hour. Despite their full-time jobs, they have to turn to municipalities for additional assistance because they are living below the subsistence level. The Social Democratic Party SPD calls this unhuman.

The liberal coalition partner of the CDU, the Freedom Party FDP, strongly opposes the minimum wage. This party emphasizes the economic importance of the absence of the minimum wage. If labor is expensive, jobs will be lost, they argue. Germany now has some kind of a minimum wage by sector, but in sectors with many international competition the minimum wage does not exist.

The German Economic Growth also has its dark side. Because of the he lack of a minimum wage millions of Germans need assistance from local authorities or are threatened by poverty.

Partly this is the formula behind the German economic success. But the economic growth rates has a shadow side: increasing poverty. The number of Germans living near the poverty line, is around 16 percent. In the United States, the federal minimum wage is $ 7.25 per hour. States may have their own minimum wage, but the majority of the states follows the wage directive of Washington. Like the German Christian and Social Democrats, Obama sees the minimum wage as a way to fight poverty in his country. He wants to raise the minimum wage of $ 7.25 up to $ 9 per hour, he said last week.

President Obama wants to raise the minimum wage in the United States.

Various economists, employers and Republicans don' t believe this is a good idea. They use the same argument as the Liberal Party FDP in Germany. Increase the price of employment and you get less of it, said the Republican chairman of the House of Representatives John Boehner. These critics point out the implications of the last increase in 2009, when 600.000 jobs for low-paid teenagers would have been lost. Employment figures show that approximately half of the 3.8 million employees with a minimum wage is younger than 25. With a higher minimum wage, these jobs are at risk, these critics argue.

The $ 9 an hour minimum wage Obama proposes is nothing compared to the $ 21 per hour minimum wage that the American Center for Economic and Policy Research last week calculated, based on the increased labor productivity since the fifties in the past century.

This is the translation of an article published in the Dutch newspaper Trouw of 18 February 2013

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