Saturday, July 5, 2014

Germany set the minimum wage

German parliament decided to introduce the minimum wage. All of the employees are going to receive at least $11.61 per hour from 2015.

The Wall Street Journal: German Parliament Approves Minimum Wage From 2015

Chancellor Angela Merkel is the top of the Christian Democratic Union. Since its ideology includes social conservatism, she might not support this idea. However, she could not avoid the approval of the minimum wage because she formed a big coalition with the Social Democrats Party in 2013.

My past entry: Grand coalition in Germany

By the way, it is interesting that Germany has not established the minimum wage yet excepting for limited workers. Generally speaking, the minimum wage stabilizes the lives of untrained workers. On the other hand, it has a risk to reduce the mobility of the human capital market. I am not certain about the relationship between German economy and the lack of the minimum wage. It is possible that Germany will suffer from economic suppression caused by the new legislation in the future.

Each country in EU sets its own amount of the minimum wage. The difference of salary may be a reason for immigration. However, unskilled workers have difficulty to change their lifestyle. This new law will not accelerate immigration to Germany immediately.

In Japan, there is also controversy regarding the minimum wage. Some economists claim that the withdrawal of it will be beneficial through the improvement of metabolism in each company. I think that it is theoretically right. However, the abolition of the minimum wage will not vitalize most of the companies actually. The first reason is that the labor population is decreasing in Japan. It is impossible for companies to employ more persons with cheap cost.

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