Bloomberg News

Merkel-SPD Coalition Negotiations Deadlock on Minimum Wage (1)

November 20, 2013

Germany's Chancellor Angela Merkel

Angela Merkel, Germany's Chancellor, center, takes part in coalition talks between her conservative CDU/CSU union and the social democratic SPD party in Berlin on Nov. 19, 2013. Photographer: Johannes Eisele/AFP/Getty Images

German Chancellor Angela Merkel and the Social Democrats deadlocked on labor issues including setting a national minimum wage, jeopardizing their self-imposed deadline of forging a coalition deal in seven days.

Merkel’s Christian Democrats, their CSU Bavarian sister party and the SPD collided over “areas of true dissent” on a minimum wage, CSU General Secretary Alexander Dobrindt told reporters in Berlin yesterday.

“There’s a long way to go, more than one could have expected,” Dobrindt said after a sixth meeting of the 75 top negotiators including Merkel. Officials from all three parties said they still aim to have a deal by Nov. 27. The top table of negotiators resume their work in Berlin tomorrow.

More than eight weeks after Merkel’s Sept. 22 election victory, negotiators are struggling to overcome differences to swear in a new government by Christmas. Party officials for the first time yesterday publicly discussed the possibility of new elections as an option if the talks break down.

Andrea Nahles, the SPD’s general secretary, said that while negotiators had agreed on forming a commission to set the wage, differences remained on how to implement it and what kind of exceptions would be in place. The SPD campaigned on a statutory minimum wage of 8.50 euros ($11.50) an hour throughout Germany, and says it is a precondition for entering into coalition. Merkel’s bloc wants wages to be set by industry and labor.

Conditional Funding

“To bring together the many demands that we have will mean nothing less than squaring the circle,” Nahles said, alongside Dobrindt and their CDU counterpart, Hermann Groehe.

Moreover, SPD negotiator Ralf Stegner said his party is refusing to bow to CDU pressure to make all policy decisions conditional on the availability of funding, while Merkel’s bloc says a commitment to avoid new debt or tax increases must remain the government’s guiding principle.

“We won’t be able to agree on any coalition accord with finance restrictions or audits on Social Democratic priorities,” Stegner said by phone before the talks. “Most of the difficult issues will only be resolved at the end.”

Tensions arose after SPD leaders over the weekend faced down internal opposition, prompting SPD Chairman Sigmar Gabriel to demand that Merkel “deliver” on policy. Horst Seehofer, the CSU chairman and Bavarian premier, signaled that his party won’t shy away from new elections should talks run aground.

“New elections are difficult in Germany for good reason,” Groehe said before the talks. “We want these negotiations to be successful, but we aren’t afraid if the voters must decide again.”

Latest Poll

Support for Merkel’s CDU/CSU bloc held at 41 percent for a second week in a Forsa poll for Stern magazine and RTL television released today, after taking 41.5 percent in the election. The SPD was at 24 percent, also unchanged on the week, though down from 25.7 percent in September.

The SPD has placed a further hurdle in the way of forming a coalition after it pledged to put any draft accord to a vote of its 470,000 members, a process due to take about two weeks.

Regional CDU members in the states of Baden-Wuerttemberg, North Rhine-Westphalia and Rhineland-Palatinate plan to debate whatever accord is reached amid growing unease over concessions being made by Merkel’s bloc, Die Welt newspaper reported today.

“Is Merkel giving way on all CDU positions to secure the Chancellorship?” Bild newspaper said in a headline in today’s edition over an article that said the SPD had got its way on 10 of 12 main policy areas.

Policy Tally

Bild included a commitment to some sort of minimum wage among the concessions made. Others were on quotas for women on company boards, the planned financial transactions tax and rent controls. The CDU has won through on pensions for mothers of children born before 1992 and on its refusal to support euro-area bond issuance, according to Bild.

With at least a dozen working groups still thrashing out policy differences, further rounds of talks among the top 75 negotiators are scheduled for Nov. 26 and Nov. 27 after tomorrow’s meeting.

“If the SPD wants to improve its chances at the next election in 2017, it must first demonstrate that it can again govern,” Manfred Guellner, the head of Forsa, was cited as saying by Stern. “Right now that can only happen in conjunction with the Union bloc.”

To contact the reporters on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net; Birgit Jennen in Berlin at bjennen1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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