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Germany has 'unfair' edge with low salaries

Minister of State of the Foreign Ministry Michael Roth during an interview in Berlin on February 20, 2014
Minister of State of the Foreign Ministry Michael Roth during an interview in Berlin on February 20, 2014

Germany's low salaries have given Europe's biggest economy an "unfair" competitive advantage over its partners and must be corrected, a junior German minister has said.

Michael Roth, state secretary for European Affairs, was commenting on Germany's record trade surplus, which surged to nearly 200 billion euros ($270 billion) last year, and has seen Berlin placed under EU scrutiny.

He said in an interview with AFP Thursday that imbalances had appeared among EU members and there "was a duty not only for countries running a deficit but also for Germany to reduce them".

The comments by the Social Democrat politician differ from the stance of Chancellor Angela Merkel's conservatives, who disagree that Berlin has a problem with its trade surplus despite it consistently exceeding EU limits.

"With the sharp rise of the low-wage sector in Germany, the growth in precarious employment, we have given ourselves an unfair advantage over our partners," Roth said.

"It must be gradually eliminated," he added.

Merkel's new left-right "grand coalition" with the Social Democrats has already sent "a clear sign" of change through its agreement to introduce a national minimum wage, Roth said.

And tackling Germany's trade surplus -- which he said was a "sensitive" topic in Germany -- was "not about reducing exports but rather about increasing domestic demand."

Germany has seen a rise in low-paid jobs and precarious work contracts since a raft of labour market reforms introduced around a decade ago under Merkel's predecessor, ex-chancellor Gerhard Schroeder, which helped bring Germany's unemployment rate down to one of the lowest in the EU.

But Berlin has also come under pressure from the US to spur consumption and investment at home to help revive European growth.