Public Pressure Wins

The parliamentary leaders of both Chancellor Angela Merkel's Christian Democrats and their junior coalition partner, the Social Democrats, said they will recommend lawmakers not approve the plan.

"Given the public discussion," they said that it had become evident that the increase cannot be implemented now.

The planned pay hike was the result of a recent increase for public-sector workers. The idea was to index MPs' salaries to those of federal judges.

The move would have seen lower-house lawmakers' monthly pay rise from last year's level of 7,009 euros ($10,910) to 8,159 euros by 2010. That would have amounted to a 16 percent increase in total. The issue was set to be voted on in parliament next week.

Increasing numbers of lawmakers from both sides of Merkel's coalition had said in recent days that they would vote against the increase in the face of strong criticism from the opposition, German media and others.

Politicians asked to show moderation

"It's good that the grand coalition has realized that the salary increase isn't in keeping with the times," said Fritz Kühn, leader of the opposition Green Party. "The CDU and SPD would be well advised in future to recognize the social realities in this country and act accordingly."

When the planned salary hike was announced earlier this month, critics immediately pounced, warning that at a time when food and energy prices are soaring and global economic growth is slowing, politicians should rather set an example of moderation.

The decision to abandon the pay increase came a day after an official study showed an increase in the number of people classified as living in poverty in Germany.

According to the survey, 13.2 percent of Germans live in poverty -- defined as having less than 60 percent of the average income -- after various social welfare payments are included.