Ten billion euros in tax relief: the coalition presents its reform package

Berlin (dpa/d.de) – Tax cuts worth ten billion euros, more flexible employment contracts and a considerable reduction in red tape are all part of the reform package presented by the governing coalition. The leaders of the governing parties agreed on a reform package with 34 items that include the previously initiated pension and healthcare reforms. The plans to enable greater flexibility regarding working hours were postponed.

The coalition partners spent several months working on this comprehensive reform package in several rounds of negotiations. The package aims to stabilise social security systems and boost Germany’s stagnant economy. Federal Chancellor Friedrich Merz spoke of an “overdue change of course”. “We want to bring Germany back on track. It is clear now that this is possible,” he said.

Businesses and some of the trade unions believe that the package offers good opportunities. Rainer Dulger, the president of the employers' association BDA confirmed that the coalition had created the conditions for an “overdue change of course” towards growth and employment and urged that this had to be turned into a “true economic turnaround”. The German Chamber of Commerce and Industry (DIHK), too, assessed the decisions as largely positive and described the reduction of bureaucracy as a “real breakthrough”.

However, the opposition and trade unions have also expressed criticism. Christiane Benner, the leader of the metalworkers’ union IG Metall, referred to the plans to relax the rules concerning dismissal protection and to allow for more fixed-term contracts without material reasons as an “attack on employee rights”. The plan to eliminate the option to get sick notes over the phone was also met with resistance by the unions.

Labour Minister Bärbel Bas acknowledged both sides’ willingness to compromise and stressed the coalition’s responsibility. With this reform package, the government seeks to demonstrate its ability to take action in the run-up to the decisive parliamentary elections in two federal states in eastern Germany in September. Merz stressed that the parties of the political centre had to prove that “we are shaping our country, we are modernising our country, and we are leading our country into the future”.