The Federal Ministry of Labor sees a need for action in Germany in view of a new EU minimum wage directive. Although the minimum wage in the Federal Republic is high enough, too few people benefit from collective wages, according to a response from the ministry to a request from the German Press Agency.

The EU countries are called by the new EU law to present an action plan if the collective bargaining coverage is less than 80 percent. "In the Federal Republic we have not achieved a collective bargaining coverage of over 80 percent, even in the heyday of the social partnership," it said.

According to the Federal Statistical Office, the rate in Germany in 2019 was 44 percent. The Ministry of Labor also announced that the coalition agreement provides for measures "that we now want to tackle quickly". A law is expected to be introduced next year.

Collective agreements regulate the rights and obligations of employees and employers and can apply to companies or entire sectors, for example if the employer is in an employers' association.

In a final step on Tuesday, the EU states cleared the way for the new EU rules. The law includes guidelines on how to set decent minimum wages and encourage collective bargaining. Negotiators from the European Parliament and the EU states had previously negotiated the law.