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U-turn on minimum wage for foreign drivers

Germany temporarily hit the brakes Friday on applying its new minimum wage to foreign truck drivers transiting the country in a move welcomed by Poland, which vigorously opposed the system.

Published: 30 January 2015 13:46 CET

Labour Minister Andrea Nahles said after talks with her Polish counterpart in Berlin that the decision was taken "out of consideration for (Germany's) neighbours".

The suspension will continue until European rules on the issue have been clarified, she told reporters.

Polish transport companies and the government in Warsaw raised objections after neighbouring Germany introduced a national minimum wage of €8.50 an hour on January 1, including for lorry drivers passing through the country even just for a few hours.

Germany is the only European country not to exclude transit workers from its new minimum wage which it has argued was needed to stave off wage dumping.

An association of Polish transporters last week slammed the German measure as "discriminatory and disproportionate" for requiring Polish-based firms to pay their drivers the German minimum wage for the period they are on the country's soil, or face a fine.

The Polish government had urged Berlin to change the system and complained to Brussels, where the European Commission last week opened a preliminary case to look into whether it complied with European law.

Polish trade unions however had written to Nahles to appeal to her to stand firm.

Polish Labour Minister Wladyslaw Kosiniak-Kamysz called Berlin's suspension "a good decision" and urged Brussels to clarify the legal situation "as quickly as possible".

The suspension only applies for transit journeys and not to deliveries by foreign truckers in or from Germany.

SEE ALSO: Poland bridles at German minimum wage

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How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year.

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’, Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn.

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment?

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024 about 1 percent below the estimated structural level.

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending?

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”. The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”.

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025.

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023.

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write.

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers.

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.”

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