Minimum Wage, Pensions for Mothers, Car Toll: Has the Grand Coalition Agreement Been Reached at the Expense of the Economy and Taxpayers?

After lengthy negotiations the SPD and the CDU/CSU have agreed upon a grand coalition. According to Ulrich Kater, Deka Bank, the coalition agreement features: “A great deal of pragmatism with regard to satisfying stakeholders, little foresight with regard to future challenges, and negative consequences that are hidden in the future”. For Ronnie Schöb, Freie Universität Berlin, the Republic of Germany is embarking upon a risky social policy experiment with the introduction of the minimum wage in 2015. The minimum wage endangers the social policy goals that the great coalition itself has set out in its coalition agreement. It will not lead to a fairer distribution of wealth or unburden the Public Treasury, but it will put jobs at risk. Michael Bräuninger, WeltWirtschaftsInstitut (HWWI) and Helmut-Schmidt-Universität Hamburg, assesses the coalition agreement as: “good on the whole, but problematic in reality”. The coalition agreement features an important acknowledgement of Germany as a manufacturing location. However, certain decisions in the field of labour markets and social policy are particularly critical. Ingo Kramer, Bundesvereinigung der Deutschen Arbeitgeberverbände, highlights that while many elements of the agreement are not helpful from an economic point of view, some are heading in the right direction. He argues that labour market flexibility should not be scaled back in order to protect the employment success story of recent years.