Germany is set to introduce a national minimum wage, conservative Chancellor Angela Merkel said on Thursday, giving in to a key demand by her likely centre-left governing partners.
"The Social Democrats will not conclude negotiations without a universal legal minimum wage," she said about ongoing talks to form a 'grand coalition' government since a September election.
She stressed that her Christian Democratic Union (CDU) party does not agree with the step and added that she and her party would "try everything to prevent the loss of jobs through this measure".
Merkel won September 22 elections but fell narrowly short of a governing majority, forcing her CDU and its Bavarian partners the CSU to enter into tough coalition talks with the Social Democratic Party (SPD).
In the talks, SPD chief Sigmar Gabriel, Merkel's likely future vice chancellor, has insisted on the party's core demand of a nationwide minimum wage of at least 8.50 euros ($11.40) per hour to help Germany's growing army of working poor.
The SPD has promised to put any coalition deal up for a vote to its sceptical party base of almost half a million members, many of whom do not want their blue-collar party to govern in Merkel's shadow, but whose consent would be needed.
Merkel's party favours separate pay deals by industrial sector and region, arguing that a national minimum wage would harm many small and medium-sized businesses and could force them to lay off workers.
A patchwork of existing pay deals has set minimum wages for a dozen industrial and service sectors, including cleaners, electricians and security guards.
Minimum wage levels are often higher in western states than in the economically weaker states of the former communist East Germany. Caregivers, for example, earn nine euros an hour in the west but only eight euros in the east.
Both Germany's major parties aim to end their talks, which have been split into separate working groups, next week, with the aim of forming a government before the end of the year.
However, negotiators have said as many as 100 issues remained unresolved so far.
Merkel, meanwhile, insisted on her own party's red-line issue of not raising taxes and stressed she wanted a halt to new debt by 2015.
She argued that balanced budgets help maintain investor confidence and global competitiveness and added that "Europe's problem is that we've promised almost everything so far and have kept very little of it".
Addressing a Berlin business forum organised by Munich newspaper publisher Sueddeutsche Zeitung, she said a grand coalition was "not the heart's desire of politicians" but had resulted from the election outcome.
She said, as the talks have dragged on, that "we are not making it easy for ourselves -- you can marvel at that every day".
She said that "I too will have to consent to measures which I do not innately agree with," mentioning the minimum wage as an example.
"The voters have neither given an absolute majority to the business wing of the CDU, nor the left wing of the SPD. Only both of us together will have the ability to govern."