(de-news.net) – Business organizations, labor unions, medical associations, and leading economists have expressed sharply differing assessments of Germany’s proposed 34-point reform package. Presented by the governing coalition of the CDU/CSU and SPD, the proposals combine measures affecting taxation, labor market regulation, healthcare administration, and housing policy. Among the most significant initiatives are tax relief, broader use of fixed-term employment contracts, a requirement for employees to provide a medical certificate from the first day of illness, and the establishment of a federally backed housing corporation intended to expand the supply of affordable housing by combining public and private investment.
The housing and construction sector responded positively to the package. Axel Gedaschko, President of the GdW Federal Association of German Housing and Real Estate Companies, described the measures as an important step toward increasing the availability of affordable housing. Finance Minister Lars Klingbeil argued that the proposed federal housing corporation would allow the government to construct housing on a much larger scale by mobilizing both public and private sources of capital. At the same time, the coalition agreed to prohibit the nationalization of companies with extensive residential property holdings, a decision that drew criticism from The Left (Die Linke).
Business organizations broadly welcomed the reform package while emphasizing that additional structural reforms would still be necessary. Rainer Dulger, President of the Confederation of German Employers’ Associations (BDA), characterized the package as a long-overdue shift in economic policy that could strengthen both competitiveness and business confidence. He nevertheless argued that the reforms should be supplemented by further measures, particularly reductions in employers’ and employees’ social security contributions. Melanie Gönner, President of the Federation of German Industries (BDI), stated that the agreement demonstrated both the coalition’s willingness and its capacity to pursue reforms, although she maintained that it did not constitute a sufficiently strong stimulus to generate sustained economic growth. Jörg Dittrich, President of the German Confederation of Skilled Crafts (ZDH), likewise welcomed the inclusion of several long-standing proposals advanced by the skilled crafts sector, especially the planned extension of Sunday opening hours for bakeries and confectioneries.
Economists and business groups welcome reforms as political opposition pushes back
Representatives of the healthcare and labor sectors were considerably more critical of several provisions. Markus Beier, Co-Chair of the German Association of General Practitioners (Hausärztinnen- und Hausärzteverband) argued that abolishing telephone sick notes would substantially increase administrative workloads for physicians’ practices while also lengthening waiting times for patients requiring medical attention. The association further maintained that available statistical evidence showed no indication that the introduction of telephone certification had resulted in higher rates of sick leave, making the proposed change difficult to justify.
Labor organizations delivered a mixed assessment of the overall package. Yasmin Fahimi, Chair of the German Trade Union Confederation (DGB), welcomed the planned income tax reform together with higher tax-exempt bonuses for work performed on Sundays and public holidays. However, she criticized the planned expansion of fixed-term employment without objective justification and opposed proposals that would make severance arrangements more advantageous for higher-income employees. Frank Werneke, Chairman of Verdi, similarly argued that broader use of temporary employment contracts would shift entrepreneurial risk from employers to employees, while also contending that abolishing telephone sick notes reflected an institutional culture of mistrust toward workers. Verena Bentele, President of the Social Association VdK, dismissed the overall reform package as inadequate and argued that more substantial relief could be financed through higher top income tax rates together with reforms of inheritance and wealth taxation.
Economists likewise reached contrasting conclusions regarding the likely impact of the reforms. Marcel Fratzscher, President of DIW Berlin, described the package as a minimal compromise that placed greater emphasis on relieving businesses than on protecting employees. He further argued that the proposed tax reforms were insufficiently financed and would likely contribute to a larger federal budget deficit. By contrast, Clemens Fuest, President of the Ifo Institute, welcomed the planned liberalization of labor market regulations but maintained that the income tax reform would be less supportive of economic growth because the higher top marginal income tax rate would increase the tax burden on many medium-sized enterprises.
Chancellor Friedrich Merz announced that negotiations with the SPD on labor legislation would continue in the autumn. He explained that the coalition had initially reached agreement only on extending Sunday opening hours for bakeries, confectioneries, and libraries, while emphasizing that the CDU/CSU had not abandoned its objective of introducing greater flexibility into working-time regulations. Future negotiations, he indicated, would focus on the possibility of replacing the existing daily maximum working time with a weekly maximum. Meanwhile, Finance Minister and SPD Co-Chair Lars Klingbeil defended the requirement for employees to present a medical certificate from the first day of illness, arguing that the compromise had enabled the SPD to prevent the introduction of unpaid waiting days before sick-pay eligibility.
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