Coalition Summit at the Chancellery: Expectations Are Tempered Ahead of Top-Level Meeting with Social Partners

The agenda is ambitious: on the list are planned reforms in the areas of taxes, labor, social affairs, and bureaucratic reduction. The Chancellery had sent the social partners a questionnaire in advance, which included the question: "In welchen Politikbereichen sind Reformen prioritär?" Another discussion question read: "Wie sichern wir unsere Wettbewerbsfähigkeit und Unabhängigkeit – trotz China-Schock und US-Zöllen?"

Broad Agenda and Chancellery Questionnaire

CSU state group leader Alexander Hoffmann, who is also the first deputy of Union parliamentary group leader Jens Spahn, nevertheless urged confidence. He called the meeting itself a success because the social partners being "eine Zusammenkunft an einem Tisch dringend überfällig" sei. After all, "die Sozialpartner, wenn wir in die Vergangenheit gucken, Großes für dieses Land geleistet" hätten, said Hoffmann. At the same time, he appealed to the social partners' societal responsibility: "Nicht nur die Politik, sondern eben auch die Sozialpartner – bestehend aus Arbeitgebern und Arbeitnehmervertretern – haben eine Verantwortung, dass wir dieses Land reformieren, dass wir dieses Land nach vorne bringen."

Hoffmann and Bilger: Confidence with Brakes

Parliamentary group managing director Steffen Bilger of the Union parliamentary group framed the goal soberly. "Aus unserer Sicht geht es darum, im Austausch zu sein", he said. The Union expects results only at the coalition committee meeting on 30 June. "Sie sind die Voraussetzung dafür, dass Deutschland auch in Zukunft wirtschaftlich stark, sozial verlässlich und international wettbewerbsfähig bleibt", Bilger stressed with regard to reforms in healthcare, long-term care, pensions, and tax relief. During the parliamentary summer break, scheduled from 11 July to 6 September, cabinet decisions and initial first readings are then to follow.

Spahn and Merz: Competitiveness in Focus

Union parliamentary group leader Jens Spahn, for his part, warned against expectations being set too high and pointed to possible lines of conflict. He hoped that the meeting on Wednesday would yield a "gemeinsames Verständnis" of the current problems and the necessary solutions. The reforms planned by the coalition had the "übergeordnete Ziel" of strengthening competitiveness and should "vor allem Wachstum ohne neue Schulden möglich machen." Whether that would succeed, however, only those affected could decide.

Chancellor Friedrich Merz had urged all sides in the run-up to enter the negotiations without "rote Linien." The chairwoman of the Sozialverband Deutschland, Engelmeier, meanwhile warned against further burdens. "Sie hoffe auf Entscheidungen, die Reformen nicht als Kürzungsprogramm verstünden, sondern als Auftrag für mehr soziale Sicherheit, gerechte Finanzierung und spürbare Entlastung kleiner und mittlerer Einkommen", she told the news agency AFP. The VdK president Bentele expressed similar views.

On the employers' side, the BDA employers' association, the BDI industrial federation, the chamber of industry and commerce, and German skilled crafts (Deutsches Handwerk) issued a joint declaration. "Es gehe darum, möglichst große Schnittmengen in zentralen und teils hochumstrittenen Reformfeldern auszuloten", it said. The willingness to compromise has thus been signaled, but the substantive divides between the camps are likely to remain deep.

Unions Under Pressure

The unions know this too. Verdi chief Frank Werneke dismissed the federal government's reform proposals as a "Reformpaket des Horrors." DGB chief Yasmin Fahimi threatened a "Großkonflikt." The discontent on the employees' side is fueled not least by a shrinking organizational base: at the turn of the millennium, the unions represented about 68 percent of German employees; today that figure is 49 percent – and their numbers continue to dwindle.

Historical Parallels Around the Turn of the Millennium

The historical comparison is obvious: around the turn of the millennium, Germany was regarded as the "kranker Mann Europas." At the time, the unions refused to back the reform of unemployment insurance. The then federal chancellor, Gerhard Schröder, pushed his reform agenda through against all resistance – a historic feat of strength that moved the country forward. The model of social partnership likewise helped the Federal Republic to prosperity for decades. The question is whether this mechanism can still bear weight under the current conditions.

Within the Union parliamentary group, concern is growing that the coalition will go into the summer break with a "Minimalkompromiss und ohne spürbare Reformentscheidungen" and effectively lose the state election in Saxony-Anhalt, where the AfD leads the CDU candidate Sven Schulze in the polls. Christian von Stetten, chairman of the Parlamentskreis Mittelstand, had already at the end of April become the first prominent CDU politician to predict an early end of the black-red coalition. He sees the chancellor in a dilemma: "Er weiß ganz genau, in welcher schwierigen Lage sich unsere Wirtschaft gerade befindet, und er weiß immer noch, wie wir das Land wieder auf Vordermann bringen können – wenn er nur regieren könnte, wie er wollte."

State Election in Saxony-Anhalt as a Factor

Hoffmann described the coming weeks as the "herausforderndste Zeit für diese Koalition" and also pointed to the upcoming football World Cup. He expects the reform process to drag on into the autumn, not least because the pension commission is only now presenting its reform proposals. "Wir müssen unter Beweis stellen, dass diese Regierung, vor allem aber die Demokratie reformfähig ist", said Hoffmann. "Die Menschen wollen jeden Tag unter Beweis gestellt bekommen, dass die Demokratie die für sie beste Staatsform ist."

"Konsenskränzchen" as a Warning

The coalition committee, according to a unanimous warning in the political debate, must not become a "Konsenskränzchen." "Deutschland brauche keine wohlfeilen «Konsenskränzchen» und «Orientierungsdebatten» mehr, deren einziges Ergebnis ein «wiederaufgenommener Gesprächsfaden» ist", is the admonition. Whether the dialogue on Wednesday evening will actually produce substantial reform steps will only become clear in the coming weeks.

The meetings of the CDU bodies at the beginning of the week had likewise struck a tone of tempered expectations. The motto: first listen, then decide. The struggle for viable compromises in pension, tax, and labor market policy is thus likely to enter a decisive phase – with an uncertain outcome for the black-red coalition.