Governing Germany

Loosen Up the Coalition Contract

Source: DPA
Volker Kauder is easing up on businesses.
  • Why it matters

    Why it matters

    Businesses have criticized the agreement between Germany’s ruling coalition parties, saying it should be flexible so it can adapt to changing business climates.

  • Facts


    • The German coalition contract should be treated as a guideline, not like constitutional law.
    • Germany’s unions are trying to get the coalition contract changed to their advantage.
    • The governing parties need to take into account changes regarding international trade, exports and the Ukraine crisis.
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Volker Kauder, the leader of the ruling Christian Democrats’ faction in the lower house of the German parliament, had given the business community his word. There will be no new financial burdens placed on them beyond the points agreed in the contract between the country’s ruling coalition parties, Chancellor Angela Merkel’s Christian Democrats and the Social Democrats.

But his statement also meant that everything in the 130-page document would be implemented. This is despite the several changes in political climate since the contract was signed, including tensions in Ukraine and Russia, stagnation in France’s economy ― Germany’s most important trading partner ― and the faltering attitude toward Europe’s austerity plan.

Domestic realities in Germany have also changed. Incoming orders to Germany have fallen three times in a row, companies are pulling back on investment and it looks like there will be fewer jobs available in the economy from spring next year.

As a result, Mr. Kauder said he wants to focus on generating growth instead of redistributing and regulating.

If Mr. Kauder wants to keep his word, he has to enforce the wording of the coalition contract.

The business community certainly heard the message. The only difficulty was believing it, especially in view of the plans by Andrea Nahles, the labor minister and member of the left-leaning Social Democrats. Ms. Nahles wants lighter penalties for people on unemployment benefit who refuse jobs or miss interviews. She also wants more emphasis on support for them.

The flexible pension scheme is also causing skepticism. In return for agreeing to lowering the pension age to 63, the CDU persuaded the Social Democrats to agree to make it easier for older people to work beyond the statutory retirement age. But trade unions such as IG BCE (mining, chemicals and energy workers) have already seized control of the issue. They want employees aged 60 to start working shorter hours on a partial pension plan.

Employers are also concerned about trade union opposition to the proposed regulation of temporary workers and service contracts, both of which allow businesses to react more flexibly to economic fluctuations. The unions’ demands go beyond what the coalition contract had in mind.

So if Mr. Kauder wants to keep his word, he has to enforce the wording of the coalition contract. Better yet, he should make sure that the document isn’t treated like the constitution, so that it can be adapted to new economic conditions. For the first 100 days, the document should be a guide. In the first year, it should serve as an orientation. After that, do what you think is best.

The author is a correspondent in Berlin covering the labor market and unions. Contact:

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