Merkel touts 'grand coalition' deal including a minimum wage

27th November 2013, Comments 0 comments

German Chancellor Angela Merkel on Wednesday hailed a hard-fought accord for a government with her main rivals the Social Democrats, which includes the creation of a minimum wage in Europe's top economy.

Presenting the fruits of 17 hours of tense talks overnight after five weeks of horse-trading, a remarkably jovial Merkel joined the leader of her Bavarian allies the CSU and the centre-left Social Democratic Party (SPD) to welcome a "grand coalition to accomplish grand tasks for Germany".

"We have a good chance of being able to say in 2017 that people are doing better than they were today," said Merkel, who romped to a third four-year term in September elections but fell just short of an absolute majority.

"This agreement is aimed at restoring fairness and re-establishing the social balance where it's been lost," SPD leader Sigmar Gabriel said, adding that he was "extraordinarily grateful" to the conservatives that the coalition deal could be signed.

"I am highly satisfied with the content of the agreement," CSU chief Horst Seehofer added, trading jokes with Gabriel and Merkel at a relaxed 90-minute news conference.

European markets welcomed the end of political uncertainty in the continental powerhouse, with stocks and the euro rising on news of an agreement.

The chancellor hopes to be sworn in on December 17, but a key hurdle remains: SPD members must still sign off on the coalition pact in a binding ballot next month.

Gabriel, who is expected to become Merkel's vice-chancellor and possibly head a super-ministry encompassing the economy and energy policy, said he was confident a "large majority" would be behind the agreement when the votes are counted, probably on December 14.

But the outcome remains far from certain because many members reject the notion of their traditionally blue-collar party again governing in the shadow of powerful Merkel, as it last did in 2005-2009.

After that uneasy political marriage, the SPD suffered two humiliating electoral defeats in a row, winning less than 26 percent against the conservatives' nearly 42 percent in the September 22 vote.

In the final haggling, the SPD scored key concessions, including a national minimum wage from 2015, while Merkel stuck to her guns on her own red-line issues, blocking higher taxes for the rich and opposing new debt from next fiscal year.

The centre-left daily Sueddeutsche Zeitung said the 185-page pact wasn't perfect but that Social Democrats ought to back it.

"You can't expect more from a grand coalition than small steps. But is it worth rejecting? Surely not," it said.

Social Democrats forced an agreement to stay silent for now on who would get which portfolio in the next Merkel cabinet so that members would focus on policy achievements.

Merkel and Gabriel acknowledged that ministries had been discussed during the lengthy negotiations but declined to be drawn on details.

However conservative veteran Wolfgang Schaeuble is widely expected to stay finance minister while Social Democrat Frank-Walter Steinmeier looks headed back to the foreign ministry following his 2005-2009 stint there.

Army of working poor

The SPD scored a victory on its core demand, a minimum wage of 8.50 euros ($11.50) per hour from early 2015 to help the country's army of working poor.

Some sectors and regions will have another two years to phase in the policy, which Merkel called a "fair compromise" that would avoid mass job losses.

The move aims to narrow a broad wealth gap but should also cheer critics in the United States, the International Monetary Fund and Europe who want the European export power to stimulate domestic demand and correct its lopsided trade balance.

The SPD also pushed through a women's quota for the boards of listed companies and the partial scrapping of a ban on dual nationality for non-EU citizens, a key issue for Germany's large Turkish immigrant community.

Both sides also agreed to lower the retirement age to 63 for those who had paid into the state system for 45 years, and to boost financing for education and infrastructure.

And they compromised on a renewable energy target of 55-60 percent of total electricity demand by 2035.

Bavaria's CSU also clinched its own pet issue -- charging foreign drivers a toll for using Germany's famed autobahn highways, as long as this is in line with European Union rules.

Major sticking points that delayed the talks focused on additional spending and investment, now due to total 23 billion euros by 2017.

Political scientist Gero Neugebauer of Berlin's Free University said each side could go to their constituents claiming triumph.

"To put it bluntly, the CDU wanted power, the CSU wanted the road toll and the SPD wanted to avoid getting slapped down by their own members," he said.

© 2013 AFP

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