* Majority of core SPD members polled back talks
* SPD says minimum wage of 8.50 euros per hour essential
* Also demands transaction tax, equal pay and pensions
* SPD Chairman says aim to form a govt before Christmas
* Formal coalition talks could start on Wednesday
By Holger Hansen and Alexandra Hudson
BERLIN, Oct 20 (Reuters) - Leaders of Germany's Social Democrats (SPD) won a green light from their party to start coalition talks with Angela Merkel on Sunday, after promising to wring concessions from the chancellor on a minimum wage, equal pay and transaction tax.
Discussions between Merkel and the centre-left SPD on forming a new German government can now begin on Wednesday, a month after an election saw her conservatives emerge as the biggest political force but needing a partner to form a majority.
The SPD's willingness to enter talks comes at a price. The party gave a list of demands it called "non-negotiable", including a minimum wage of 8.50 euros per hour, equal pay for men and women, greater investment in infrastructure and education, and a common strategy to boost euro zone growth.
Of a total of 229 votes cast by senior SPD members, 31 objected and 2 abstained, party chairman Sigmar Gabriel said.
"We aim to form a government by Christmas. That should be enough time," he added.
The party will also demand equal pensions in the former West and East Germany, the ability to have dual citizenship, and measures to make it easier to combine work with family life.
The SPD, which came a distant second to Merkel, was seen as her most likely partner from the start, but the party is keen to avoid a rerun of its 2005-2009 'grand coalition' with Merkel. It emerged from that with its worst election result since World War Two, making many members sceptical about another union.
A group of disgruntled SPD members protested outside the party's Berlin headquarters.
German voters, international investors and Berlin's European allies have mostly been expecting a grand coalition and few expect any partnership deal to greatly alter Merkel's domestic and foreign policy agenda.
The chancellor's talks with the environmentalist Greens broke down last week, strengthening the SPD's hand.
Such a partnership would enjoy an overwhelming majority in the Bundestag, the lower house of parliament, and find it easier to push legislation through the Bundesrat, the upper house where the governments of Germany's 16 federal states are represented.
The SPD will seek final approval of any coalition deal in a poll of its some 472,00 grassroots members.