According to a report from CNN, German Chancellor Angela Merkel has teamed up with her country’s center-left Social Democrats, and signed into law a provisional government program that will implement a minimum wage of €8.50 (about $11.50) an hour beginning in 2015.
Many experts are praising the move, saying that it could be of great help to 17% of the German workforce.
Also getting a boost is the country’s pension benefits. Starting in July of 2014, German workers who have paid into social security for 45 years will be able to retire on a full pension at age 63, two years earlier than previously allowed.
Merkel’s popularity has suffered since the onset of austerity measures sweeping across Europe has put Germany in a tight spot. Many see the move as a bid to reach out to her opposition as a means to regain some of the support she’s lost.
According to CNN:
Germany is the second most productive of the G7 economies after the United States, based on GDP per hours worked. Its position as one of the world’s top exporters shielded it from the worst of the eurozone crisis, supporting growth and jobs.
France, which is at risk of slipping back into recession, has a more generous minimum wage but Germany will pay its lowest earners more than the U.K. or Spain. The new German government will limit the use of temporary contracts and require employers to pay hirees the same as permanent employees after nine months.
Merkel said the coalition was committed to maintaining Germany’s balanced budget and further improving the country’s competitiveness.
Economists hope the wage increases, which also include a slight increase in investment, will improve domestic demand.
Watch a report from Bloomberg on the story here.