Germany's plans for a national minimum wage took a major step forward with the formal adoption of draft legislation by the government.

The German cabinet approved the plan to establish a fixed national minimum wage of $11.70 to be phased in from 2015 and fully in place from 2017.

"The minimum wage is coming. It's been approved by the cabinet. It will create greater pay justice and will be good for social cohesion as a whole in Germany," said Labour Minister Andrea Nahles, who drew up the draft legislation.

A fixed minimum wage was one of the toughest nuts to crack in the long and intense coalition negotiations between conservative Chancellor Angela Merkel and the centre-left Social Democrats (SPD).

During her first two terms, Merkel's conservative party had always favoured 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.

But the SPD was adamant: it would only enter into a power-sharing deal if the conservatives agreed to the introduction of a fixed minimum wage to help Germany's growing army of working poor.

The measure must now go before the lower house of parliament, or Bundestag, where the left-right "grand coalition" has an overwhelming majority.

The labour ministry has yet to determine whether the measure would require approval from the upper house, or Bundesrat, as well.

But in both cases, it is expected to go through smoothly.

Source: Agencies