A regional minimum wage makes sense. My previous flat outside Munich 1300€ a month for 89M2. My old flat here in Bramsche was 340€ for 110M2. Food and everything else is also a lot cheaper here.

With a minimum wage of 8.50, that would work out at 1360 a month, before tax. Here I would be living well in a huge flat, in Munich, I probably couldn't afford the rent on a one room apartment.

IIRC the tories in the UK wanted to replace national pay scales in certain public services (Nursing etc) with more regional arrangements. It didn't get a very good reception, obviously from the people who might see their wages fall because of it (why should they like that, to be fair) and more surprisingly from the press. I'm kind of surprised when the press tell the tories a policy is no good, especially when it's one you'd kind of expect them to agree with.

Because it's not simple stuff at all.

Germany does not have a single national minimum wage - true. However it does have a set of minimum wages for specific industries that vary by state and skill level.

The problem with a single national minimum wage is the same in Germany as it is here i.e. the large disparity in unemployment and the cost of living between the rich and poor regions. The left (i.e. the Left, SPD, the Greens) argue that wages should be normalised across the country, effectively raising the wages in the poor areas such as the old East and the Ruhr valley. The right (CDU, FDP) tend to argue that a single minimum wage would make the poor regions even more uncompetitive and cause the wage disparity to worsen.

To be frank, I'm not sure what I think. What I do know is that normally I would be rather surprised to see Merkel, a centre-right Kanzlerin from the old East, introduce something that her political leaning says is a bad idea. But hell, if she needs to snare the SPD, she'll have to give them something. I just hope that, for the sake of the Ore Mountain region, it's not a single minimum wage.

Regional wages have the impact of lowering incomes of those regions. If people living there decide they want more income they move to a higher income area but governments are reluctant to move all the service jobs to follow them like doctors hospitals etc. If you already have regional minimum wage it makes no additional difference, though to go from national to regional minimum wages would impact the local economies.

Which is why you should start with regional based minimum wages. When I worked in the UK, I'd get a London Rating when I was working on projects in London, which meant I'd get more money when working there than my base salary. That makes sense. The minimum should mean an acceptable standard of living in poorer regions, with a boost for more expensive areas to ensure that people living there also receive the same standard of living.

I totally agree that reducing for regions is wrong, you can only boost it in more expensive areas. If you were silly enough to base the national minimum based on the most expensive areas, then you only have yourself to blame, if you then try and cut it in poorer regions. Although I would have thought that it would have employers and prospective employees flocking to poorer regions, because they can live there better for less money than they could in a major, 'rich' city.

Poor regions tend to be poor for good reasons; the same reasons tend also to help explain why those regions don't flourish under a NMW.

So, in the case of Britain, take a look at Cornwall, Norfolk, the Highlands or the Western Isles. Why are they poor? Their main industries are (or were) primary industries that cannot support an expanding 21st century economy e.g. Mining (Cornwall), Farming (Norfolk, Highlands), Fishing (Western Isles). They're also nowhere near anything, their infrastructure is either old or sparse and it's a pain in the tuckus to get to them.

So, imagine now that I own a business that makes electronic components for the European market and I want to move to somewhere within the UK. Where am I going to move to? It certainly isn't likely to be any of the above - the workforce is totally untrained and the transport costs would be eye-watering. Unless those areas have a workforce that is significantly cheaper, they simply will not be able to compete with areas such as the South East which is far better connected and already has the trained workforce that my company requires.

The German Ore Mountains has a similar problem. They have a vicious combination of a historic over-population from the gold-rush, a low birth rate, a brain-drain of their youth, remoteness from any likely market, terrible topography, worse weather and horrible infrastructure (thanks Honecker). The only way they can compete for new businesses is to either be imaginative or to try to reduce their labour costs. The state has made admirable attempts to improve the roads and rail but it's not that good yet. If Germany brings in a single national minimum wage, my fear is that the Ore Mountains will be left with making wooden Christmas toys.

It is also because of other factors, such as being in a cultural hub. In Sweden some of the big industrial combines moved their HQ's to Stockholm because the directors families wanted to be there. So while they maintained their operations in the far north the HQ's moved south with many administrative jobs. It is the same in London, few want to move out to the regions because of the fear of never being able to move back with the London property bubble the way it is. So they lose staff.


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I'm the other way, I wouldn't want to live in London...

I was thinking more about the old industrial towns up north, as opposed to truly rural areas... But what Rusty says makes sense.

Here in Germany the Solidaritätszuschlag has seen to it that the old East has seen a lot of infrastructure and social investment (it is an additional subtraction from salary, 33.67€ in my case, which goes towards 'bringing the East up to speed'. The problem is, the East is quickly overtaking the West, so they are now talking about using the Soil in the West as well or scrapping it altogether - the state of roads in the West is very poor at the moment due to a lack of investment over the last 2 decades. When a road needs resurfacing, it becomes a lower and lower speed limits and warning signs, instead of repairs, until it becomes too dangerous and they have to repair it.)

It sounds like the US, with many states having roads no better than third world nations. Though here in the UK the local roads are maintained by the councils and the main roads generally by the Department of Transport. Both are being hit with cuts but the councils are facing bigger cuts. There is money to fund them, but governments do not want to pay for them. Road taxes are more than enough to fund them in the UK but the government treats it as another source of income to subsidise tax cuts to the rich.