Can Europe Make It?

Mietbremse and Mindestlohn mean good news for Europe as a whole

Gentle controls on the property rental market and a fair general minimum wage in Germany will set a high democratic benchmark in Europe.

Alessio Colonnelli
17 March 2015

Berlin protest against rising rents. Demotix/David von Blohn. All rights reserved.Back in the spring of 2014 Germans knew the central government intended to legislate on a cap on the housing rental market that appeared to be veering out of control. Many didn’t know what to make of it – proposals were too vague at the time. It sort of seemed a good idea to stop landlords charging whatever they fancied, indiscriminately. It did and it still does.

Having witnessed the disgraceful housing situation in London and Paris, authorities in Munich, Hamburg and other big German cities – where the cost of living is on the verge of segregating communities – gathered together to exchange their respective views on what needs to be done and duly advised Berlin.

What are the forces behind the new initiatives?

The government grand coalition between the Christian Democratic Union (CDU) and the Social Democratic Party (SPD) reached an agreement towards the end of last year on the much debated issue of property renting: the price premium must be capped when re-letting.

The new rent can exceed the local average rent only by ten per cent at the max. (Exceptions to this do however exist, one applying to historic buildings that have been recently revamped.) This is a case of mild rent regulation – a sensible measure against speculation with devastating effects on communities.

Alongside that, the 2014 national debate around the minimum wage has eventually coalesced into a much needed and long-awaited piece of legislation. From 1 January 2015, a general minimum wage for both workers and most interns is set: € 8.50 gross an hour, with roughly just under four million people potentially benefiting from it (more or less 5 per cent of the population). The general minimum wage does not replace specific industry minimum wages if these are higher than the general one.

You are left wondering how much of this is down to the Christian solidarity tradition of the right-of-centre, resolutely pro-business CDU, or to the SPD finally entering government in 2013, having its MPs mildly yet crucially increased in numbers to the detriment of Germany’s Liberal Democrats.

The Regierung’s gentle leftward shift has in all likelihood proved instrumental to the changes in question; had the previous 2009-2013 government remained unchanged – CDU plus Liberal Democrats – things would’ve possibly stayed the same as they were. One can however easily argue against this, of course.

Can Germany inspire the rest of us?

Behind the two hardly ground-breaking yet crucial initiatives – a cap on new rents and a fair minimum wage – you can see the most progressive spirit currently to be found in Europe. Now that EU’s Nordic contingent is giving in a bit on its parliamentary margins to the populist and racist rhetoric usually found in France (National Front), Italy (Northern League), the UK (Ukip and…, yes, the Conservatives), with the Feminist Party in Sweden being a conspicuous exception, it looks as if at government level only the Germans are keen on brushing-up on the good old social-democratic literature.

So with Finland, Sweden and Denmark – once determined beacons of policies combining effective social-democracy with mindful and highly successful capitalism – struggling to keep some of their respective intolerant politicos at bay, Germany is instead letting us know it’s got a couple of newish ideas about restoring equality in an austerity-devastated Continent still pandering to its business elites.

These are  the only ones left unscathed by the crisis; the ones who notwithstanding chaos all round have kept getting richer and richer. With several greedy landlords and unscrupulous, stingy employers being among them.

Despite its much (rightly, perhaps) criticised finance minister Wolfgang Schäuble – who seems unwilling to pay attention to the Greeks’ recent debt settlement proposals –, Germany has on the other hand implemented two measures that not only will visibly diminish financial hardships for many, but will also make the country look as a very appealing one as seen from abroad. (Schäuble and the new democratic trend in Germany also tell us that no countries are fortunate enough not to display any contradictions.)

With an aging and still dwindling population, Germany will be perceived as attractive by young men and women from troubled lands worldwide: whilst rejuvenating the country’s near-decrepit society, newcomers can positively replenish the treasury coffers too. Broadly speaking immigrants work hard and duly pay their tax (net contributors), this being the uncomfortable truth many on the right-of-centre don’t want to hear.

The Energiewende (Germany’s epochal energy transition), clear-cut pro-immigration measures (generally good temporary accommodation facilities are just one example), ample democratic debates on pay and gender inequalities, and now the catchphrase novelties of Mietbremse (cap on renting) and Mindestlohn (minimum wage) all show that Germany is finding its own way into the future. One that is genuinely inspired by the concept of fairness. Can we trust this country to guide us all?

The inventing spirit of Germany

The country of zillions of industrial patents – the outcome of Germany’s unparalleled manufacturing prowess, at least in Europe –, it is always keen on inventing, like a lone mad professor in a laboratory. True, Germany seems at times to be lording it over other fellow EU countries. Just take look at the whole unending Eurozone saga.

But if such equality-striving zeitgeist within Germany is not a flash in the pan, then imagine what could happen in perhaps twenty-five years’ time: a newly founded Europe, its accountancy issues sorted out, its financial centres and tax havens finally reigned in, where democracy revolves around a newly established vision for fairness. Realpolitik actually outdoing itself and achieving near-utopian goals. Unheard of.

The above German-made ‘inventions’ could be new, solid pillars, shoring up Europe from critical financial tsunamis of the kind we witnessed in 2007. China with plenty of cash buying up US cheap debt that was never going to be repaid. Seriously crazy stuff, if you think about it, with the speed of today’s technology doing its bit to make it all even worse.

Europe needs to find new ways forward and Germany seems to be good at doing this. It’s plucky enough; it gets things of the right type actually done. Let’s all perhaps chill out about Germany and its spectres of whatever kind – the past, the Euro, you name it – and take a leaf out of its book instead.

Other EU countries are in fact, today, unfit for any continental leading roles. They are either too small or too busy struggling with their own identities, at times looking terribly uncomfortable in their own skin.

Take the self-conscious UK: it’s in a right old mess and doesn’t want to acknowledge it: combined public and private debt is stratospheric and going up and up, and then the whole business with Scotland. France doesn’t know how to deal with its ethnic diversity, its intellectual elites unable to communicate with much of the population at large: where’s another Sartre or Camus when you need one? Italy is perennially fiddling with its electoral systems and finding it difficult to curb widespread corruption, nevermind its diehard, ubiquitous machismo, sadly permeating all aspects of life. Spain is on the verge of breaking up (Catalonia).

So, seventy years after the end of WWII Germany looks like it is now ready to take us all by the hand, having grown into a giant; not an economic one only anymore – a political one. Would you ever believe it? Some definitely would.

If you enjoyed this article then please consider liking Can Europe Make it? on Facebook and following us on Twitter @oD_Europe

Get weekly updates on Europe A thoughtful weekly email of economic, political, social and cultural developments from the storm-tossed continent. Join the conversation: get our weekly email


We encourage anyone to comment, please consult the oD commenting guidelines if you have any questions.
Audio available Bookmark Check Language Close Comments Download Facebook Link Email Newsletter Newsletter Play Print Share Twitter Youtube Search Instagram WhatsApp yourData