Germans to get ‘amputated’ minimum wage

8144409_sThe German parliament this week approved the country’s first minimum wage but unions and critics on the Left are not much impressed. The wage – backed by a vote in the Bundestag on Thursday – will be set at €8.50 (£6.80) per hour, which is higher than the equivalent in the US and UK.

Angela Merkel’s Christian Democrats approved the new policy as part of a power-sharing deal with the Social Democratic Party (SPD). Germany has previously left it to trade unions and business groups to fix minimum pay instead. The country is currently one of seven in the 28-nation EU without a minimum wage level. Continue reading

So where now for Europe?

The irony for the EU, wPlanet of the Euros, by DonkeyHotey, Flikr, Creative Commons licensed Attribution 2.0 Generic, source image for the European Central Bank sign is a Creative Commons licensed photo from UggBoy?UggGirl's Flickrhich even its leaders now recognise must change course radically, is that it can’t. At least it can’t in its present structure without such dislocating changes as to be scarcely credible.

The central problem has been, and remains, the single currency. As long as countries, particularly on the southern periphery, remain locked within the eurozone interest rate and exchange rate and unable thereby to operate their own monetary policy, they have no option but to resort to austerity (i.e. cutting public expenditure, squeezing wages, letting unemployment soar) to regain competitiveness. But even that route is now blocked by these European election results. Even if that route were still open, it is clearly impossible for some eurozone countries under current conditions to raise their rate of growth sufficiently to prevent their indebtedness continuing to grow. Continue reading

Why do we pick on the Greeks rather than the Germans?

There is a story popular in Germany, and often repeated in the UK, that the Greeks are being punished for their grievous financial misdeeds and the virtuous Germans are teaching them a lesson which, painful as it may be, needs to be learnt. Whilst it is true that Greece (and Greece was far from alone in these matters) suffered from a poorly organised taxation system, corruption of the State by an ultra-rich elite, and capital flight to tax havens or investment hot-spots across the world, finger-wagging at Greece and moralising about debt hardly fits the record. There have been three crucial periods in the last 60 years when Germany was in deep financial difficulty and was bailed out by creditor countries……including Greece. Continue reading

Germany: Why the Left numerical majority isn’t a political majority

Die LinkeIl Manifesto newspaper interviews Sahra Wagenknecht, deputy leader of Die Linke, on why Merkel did so well in the elections, the failure of the SPD and the prospects of unity on the Left.

For Sahra Wagenknecht, deputy leader of Die Linke (‘The Left’), there is no doubt: the weakness of the Social Democratic challenger was one of the determining factors to promote the Chancellor. ‘Peer Steinbrück could not represent an alternative: he embodies a series of bad choices, from the bank bailout to the increase in VAT, made ​​when he was minister in the Grand Coalition [government] of 2005-2009,’, argues the 44 year old leader, figurehead of the most radical component of the party.

Against the backdrop of the christian democrat (CDU-CSU) victory, how do you judge the result of Die Linke ? Continue reading

The German elections will not change a thing in the Eurozone

merkel isolatedInterview with Italian economist Emiliano Brancaccio by Peter Vernizzi translated by Tom Gill

As far as austerity is concerned, even after the September elections Germany will not turn the page. The Germans have benefited from the crisis, and even if the Bundesbank itself has reservations about the general direction of European economic policy, Berlin has no interest in changing course.”

So says Emiliano Brancaccio, researcher and professor of Economics at the University of Sannio. A report by the Bundesbank said that Greece will need further aid by the spring of 2014, in a clear, if indirect criticism of the policies of German Chancellor Angela Merkel. Continue reading