German parliament OKs higher minimum wage pledged by Scholz

BERLIN (AP) — The German parliament on Friday approved raising the country's minimum wage to 12 euros ($12.84) per hour, fulfilling a key campaign pledge that Chancellor Olaf Scholz made in the run-up to last year’s election.

The nearly 15% increase will take effect on Oct. 1. The government says some 6.2 million people in Germany currently work for less than 12 euros per hour.

Germany was a relative late-comer to instituting a national minimum wage. It was introduced in 2015 at the insistence of Scholz’s center-left Social Democrats, who at the time were junior partners in conservative Chancellor Angela Merkel’s government.

The minimum wage was initially set at 8.50 euros per hour. A commission overseeing such wage hikes that includes labor union and employer representatives later approved an increase to the current 9.82 euros. That will rise to 10.45 euros on July 1 before in reaches the 12 euro minimum three months later. The commission will continue to make revisions.

Scholz has long argued for an increase to 12 euros and made it a key plank of his campaign last September, framing it as a matter of fairness and “respect.”

Labor Minister Hubertus Heil told parliament the Oct. 1 wage jump could be the biggest that as many as 6 million Germans, including many women and workers in eastern Germany, have ever seen. Much of the formerly communist east remains less prosperous than western Germany more than three decades after reunification.

The wage hike comes amid a surge in inflation that followed Russia's invasion of Ukraine. Germany's annual inflation rate hit 7.9% in May, according to an official estimate this week, the highest rate since the winter of 1973-1974.

On Wednesday, Scholz said he wants to join employers and labor unions in a “concerted action” to find ways of cushioning the effects of rising prices while preventing a spiral of inflation in Europe’s biggest economy.