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Introduction of new minimum wage in Germany will drive growth – Study


Berlin –  The introduction of a new minimum wage in Germany in 2015 could boost economic growth by as much as 0.5 per cent over ten years, according to a study conducted by a German economic institute closely aligned with unions, the IMK, published Tuesday.

Low earners benefited from an 18 per cent pay rise on average since employers were compelled to pay a minimum rate, and low-to-middle earners also profited, the IMK found.

Higher wages among this group should now in the coming seven years contribute to a 0.5- to 0.7-per cent rise in consumption, which in turn should top up the state’s coffers, according to their models.

The IMK projected that the minimum wage would boost Gross Domestic Product by 0.25 per cent over a 10-year period, as compared to the same period without minimum wage.

Germany first introduced a minimum legal rate of pay in 2015.

The minimum wage is currently 8.84 euros (10.30 dollars) an hour.

It is set to rise to 9.19 euros in early 2019 and then to 9.35 euros in 2020, if the German government implements the recommendations of a commission composed of employer representatives, unions and experts.



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