Easier resignation, longer work: this is what the Minister of Economic Affairs is planning for you
The German economy has been experiencing near-complete stagnation for three years, with very weak growth expected over the next year. According to Federal Minister of Economic Affairs Katrin Reiche (CDU), the solution is clear and simple: people in Germany need to work more. In a press interview, the minister outlined broad reforms in the labor market that could directly affect millions of employees, from retirement age to the level of protection against dismissal.
One of the main proposals is to raise the retirement age again. While the retirement age is set to gradually increase from 65 to 67 by 2031, Reiche supports linking the retirement age to life expectancy, as is the case in countries like Estonia, Finland, and Portugal. According to this model, as life expectancy increases, the retirement age rises by a few months. Although there are exceptions for those working in strenuous professions or those with health issues, this trend may mean longer working hours for many current employees.
The discussion also targets the issue of early retirement. The minister criticized companies that complain about a shortage of young workers while at the same time pushing experienced employees over 61 years old into early retirement. Among the options being considered is the abolition of what is known as 'retirement at 63', which allows retirement without deductions after 45 years of contributions. There is also discussion about imposing higher deductions on those who retire before reaching the official age, although no final decisions have been made yet.
Protection against dismissal from work is also a controversial issue. Reich argues that strict laws protecting employees make it difficult for companies, especially in high-wage sectors like technology, to experiment and innovate. In Germany, dismissed employees often receive high compensation compared to countries like Britain or the United States. Economists like Clemens Fuest support the view that this system slows down the pace of innovation. Among the proposed models is what is known as 'flexibility with job security' (Flexicurity) as in Denmark, where it is easier to dismiss high-income earners, in exchange for strong state support through unemployment benefits and retraining. The Secretary-General of the CDU, Carsten Linnemann, proposes applying this model only to those whose annual income exceeds 100,000 euros.
At the same time, the minister is focusing on the high rates of part-time work in Germany, especially among women. Although the percentage of women working has increased significantly over the past decades, a large number of these jobs are part-time. Surveys indicate that about half of part-time working women prefer full-time work. According to government estimates, the German economy loses the equivalent of 840,000 full-time jobs due to the prevalence of part-time work, making it one of the largest untapped growth keys.
To address this, the government plans to expand childcare services and provide financial incentives. Starting in 2026, a 'bonus for transitioning from part-time to full-time' will be introduced, which is a one-time tax-exempt reward that employers can offer to encourage employees to increase their working hours. This bonus can be worth up to 4,500 euros, provided that the increase in working hours lasts for at least two years. This step aims to raise the total working hours without coercion, by making full-time work more attractive and feasible, especially for parents.