German SPD tells Merkel no deal without minimum wage

Reuters

* German left insists on new 8.50 per hour minimum wage

* Merkel to meet SPD leaders on Monday for more talks

* 'Grand coalition' with SPD most likely outcome of election

By Erik Kirschbaum

BERLIN, Oct 13 (Reuters) - Germany's opposition SocialDemocrats threw up a new potential obstacle to a 'grandcoalition' government with Chancellor Angela Merkel on Sundayahead of a new round of talks, saying they would insist on anational minimum wage.

Merkel's conservatives defeated her centre-left rivals inthe Sept. 22 election, but she needs either the SPD or theGreens as a coalition partner and neither party has shown muchdesire to join her.

The possibility that talks could take months worriesGermany's European partners, who fear it could delay decisionson measures to fight the euro zone crisis - such as a plan forbanking union.

The SPD is seen as Merkel's most likely ally - in a revivalof the right-left coalition that ruled from 2005-09 - and she isdue to hold a second round of exploratory talks with the partyon Monday.

Merkel is expected to present detailed offers at the talks,deputy SPD leader Andrea Nahles said on Sunday.

"There will be no government with the SPD unless there is adeal for a national minimum wage of 8.50 euros per hour," theleft-leaning Nahles told the Bild am Sonntag newspaper. "Iexpect more concrete commitments from her at this meeting, notjust on the minimum wage."

The SPD, which called for a minimum wage and higher incometaxes in its campaign, suffered a drubbing at the polls.

Although the party has quietly backed away from itsinsistence on a tax hike, Nahles said members would not accept acoalition deal without a minimum wage. With no minimum wage inGermany, some employers pay as little as 3 euros ($4) per hour.

Merkel's Christian Democrats have opposed a national minimumwage, saying that it is up to wage negotiators to decide andthat they only support "wage floors" in sectors. Theconservatives are, however, strictly against tax increases.

Merkel's party did not respond to Nahles' comment on Sunday.

The once proud SPD, in disarray after seeing its supportplunge to 25.7 percent from 40.9 percent in 1998, is wary aboutjoining forces with Merkel again after seeing her get most ofthe credit for the performance of their last coalition.

Rank and file supporters would have the final say on whetherto join a coalition in an unprecedented referendum that the SPDhas promised to hold among its 472,000 members.

Merkel will need a government with broad enough publicbacking to tackle the euro zone's banking and debt problems.

She could expect to make compromises with either the SPD orGreens on higher taxes on the rich, the minimum wage andinfrastructure investment for Europe's biggest economy.

By keeping the option of a coalition with the Greens open,Merkel has potentially strengthened her hand in talks with theSPD.

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