Tuesday, June 19, 2007

Dynamics: German social policies

There is a very complex system of sectoral, professional, federal and lander-level, sets of wage agreement, mostly negotiated between employers federations and trade unions. If I am not mistaken, until now, Germany does not a federal minimum wage (eg the US has one (recently revised up) and so does the UK (introduced by Blair), both set by government, not the social partners).

In the grand coalition, the Social Democrats wanted a federal one. The CDU preferred the sectoral ones. The relevant debate (national vs sectoral vs professional vs none) is not exclusive to Germany policy circles. I am not sure what the "compromise" agreement Mrs Merkel struck and the media spoke of is. But she did find one!

The same thing applies to a compromise re the social security contributions (a small rise).

Note: The VAT in Germany was raised in the beginning of the year.

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