Economic pressures necessitate deepening cuts in pension and social care benefits
The German Industry and Commerce Chamber (DIHK) has expressed concern over the current state of pension and care reforms, stating that the federal government is not doing enough to prevent rising social contributions.
In a recent statement, DIHK President Peter Adrian called for a radical change in policy, including cuts to pension and care benefits to avoid uncontrollable cost increases. Adrian believes that the current "full coverage mentality" is unsustainable and that social insurance benefits should be limited to cover only extreme cases.
Adrian also proposed increasing personal contributions where reasonable and raising the retirement age while making early retirement financially less attractive. These measures, he argued, would address labor shortages and ensure the financial sustainability of pensions and long-term care.
The proposed pension reform bill, introduced by Labor Minister Barbara Bas (SPD), has received much criticism and questions about whether the reform is moving in the wrong direction. Some argue that the bill does not go far enough to address the rising costs of social contributions.
The bill, which includes decisions regarding pensions and social security, has been pending after the recess. The parliamentary summer recess for politics in Germany ends in August, and it remains to be seen whether the bill will be passed before then.
Adrian has also expressed concern about the potential for tax increases due to increasing subsidies from the federal budget into the pension, health, and care insurance. He fears that these increases could undermine the planned reduction in corporate taxes from 2028.
In a recent survey by DIHK, more companies than ever described high labor costs as one of their biggest business risks. The chamber believes that sensible limitations on benefits are necessary to prevent further increases in contributions and taxes.
Adrian also called for more personal responsibility in social security, suggesting that those who can afford it should pay more co-payments in the statutory health insurance. He also criticised the use of subsidies in care insurance, stating that it was not intended for slight needs for help.
Adrian's statement has generated distrust and disappointment in the economy, with some arguing that the chamber's proposals would disproportionately impact lower-income workers. However, Adrian maintains that these measures are necessary to ensure the long-term stability of the German economy.
Social contributions in Germany are already significantly above 40 percent and are rising. Adrian urges corrections to this situation in the fall, calling for a balanced approach that protects both businesses and workers.
