(CNN) — Almost 2 million workers in Europe’s biggest economy are set for a big pay rise.
Three German political parties agreed to form a new government on Wednesday, with left-leaning Social Democrat Olaf Scholz set to succeed Angela Merkel as chancellor following lengthy coalition negotiations.
As part of the coalition agreement, the country plans to raise its minimum wage to 12 ($13.46) an hour, from the current rate of 9.60 ($10.77) an hour.
The move could boost the income of nearly 2 million people in Germany who earn minimum wage salaries, or about 5% of workers, according to Carsten Brzeski, an economist at ING. He said the move was “clearly significant.”
The minimum wage was already set to rise to 10.45 ($11.72) in July 2022. The text of the coalition deal did not state when the bigger one-off increase will take effect.
UBS economist Felix Huefner said the move should “boost overall wage growth” across the German economy, while warning it could “contribute to broader wage pressures.”
Germany’s hawkish central bank took the unusual step of publicly criticizing the measure this week, calling it “worrying.” It said it would have a knock-on effect on wages for higher earners.
Economists and policymakers around the world have been closely watching rising wages as a key component of inflation. In Germany, inflation in October stood at 4.5%, the highest measure in almost three decades, as energy prices shot up and the cost of food climbed.
Germany ...
Claims linking Melania Trump to convicted sex offender Jeffrey Epstein have circulated widely across platforms. Two viral allegations gained particular traction: first, that Emmanuel Macron shared...