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Germany – parliament sanctions proliferation of minimum wages
On 13 Feb the German upper house endorsed the extension of minimum wages to 6 industries, almost doubling their coverage to 3.2 million employees.
Further it agreed in principle that minimum wages could be applied to the whole economy through the “minimum remuneration law.”
Despite the strong signalling effect towards wage compression the immediate practical impact of the law will be very limited, given that the detail is yet to be decided.
In fact– while highlighting the issue – the act will leave the application of minimum wages to the outcome of the general elections in Sept09.
Asset conclusions: mildly negative for consumer stocks, curtailing job prospects for service sectors, hence private consumption.