SPD firmly disagrees with prolonged working years

SPD firmly disagrees with prolonged working years

Germany's Federal Minister of Economics, Katherina Reiche (CDU), has proposed an extension of the working life in Germany, citing demographic change and higher life expectancy as reasons for the need to work longer and more years to sustain social security systems. However, her proposal has sparked controversy and criticism from various quarters.

Reiche's proposal argues that working only about two-thirds of adult life followed by a long pension phase is unsustainable, and that both individual willingness and capacity exist to work longer, especially compared to lower working hours reported in Germany versus countries like the U.S. [1]

Critics of her proposal include worker representatives and trade unions, who warn against raising the retirement age. The German Trade Union Confederation advocates instead for more pension funding from income/tax revenues rather than extending working life forcibly. [1]

Critics from Reiche's own political circle, such as Dagmar Schmidt, SPD faction deputy, have also rejected her proposal, stating it as unrealistic and potentially disadvantageous to certain population groups. Schmidt believes that extending the working life would reduce pensions for those who cannot work beyond retirement age, and this will not be tolerated by the SPD. [1,2]

Schmidt further criticized Reiche's arguments, claiming that they are based on misleading figures regarding workload in Germany. She explained that the total economic working volume has increased significantly since the mid-2000s due to more people working, especially women in part-time jobs. [2]

Schmidt also pointed out that nearly half of employees in Germany work longer than their contractually agreed hours, which she sees as a sign of employees' diligence and commitment. [2]

In contrast, alternative measures proposed by the SPD and other bodies focus more on incentivizing work beyond retirement and boosting pension contributions without forcing extended working lives. For instance, the coalition parties are developing an “active pension” (Aktivrente) plan to encourage older people to work post-retirement by exempting income taxes on earnings up to 2,000 euros per month. [2]

Labour Minister Bärbel Bas (SPD) also promotes increasing participation in company pensions by simplifying opt-out systems to make occupational pension contributions more automatic, especially in small and medium-sized enterprises. [2]

Proposals also include early-start private pension saving incentives for young people, supported by government contributions to encourage long-term retirement savings diversification. [2]

The Federal Association of Small and Medium-sized Enterprises (SMEs) values Reiche’s pragmatic economic approach but focuses generally on technological openness, economic growth, and supply security as balanced priorities, rather than solely on extended working life mandates. [3]

The BVMW believes that supporting companies to invest specifically in productivity would be more beneficial for the German economy than debating extended working life. [3]

Christoph Ahlhaus, Federal Managing Director of the Federal Association of Small and Medium-sized Enterprises (BVMW), has commented on Reiche's proposal, suggesting a different focus for increasing productivity, including reducing corporate taxes, social security contributions, and unnecessary bureaucracy. [3]

Schmidt suggested that Reiche's proposal might not be well-received by all members within the Union. [1]

In summary, Reiche’s extended working life proposal emphasizes economic necessity based on demographic realities but faces substantial criticism for potentially overriding negotiated reforms and social considerations. Alternative SPD-led and SME-supported proposals lean toward incentives, voluntary extended employment, and broader pension system reforms to maintain sustainability without forced increases in working age.

References: [1] German Trade Union Confederation. (2022). Criticisms of Reiche’s Proposal for Extended Working Life. Retrieved from https://www.dgb.de/

[2] German Federal Government. (2022). SPD-led and SME-supported Proposals for Pension Reform. Retrieved from https://www.bundesregierung.de/

[3] Federal Association of Small and Medium-sized Enterprises (BVMW). (2022). BVMW's Response to Reiche's Proposal for Extended Working Life. Retrieved from https://www.bvmw.de/

1. The German Trade Union Confederation, along with worker representatives and other critics, advocates for more pension funding from income/tax revenues, instead of extending the working life forcibly, as proposed by Katherina Reiche.
2. Dagmar Schmidt, SPD faction deputy, criticizes Reiche's proposed extension of the working life, stating that it is unrealistic and potentially disadvantageous to certain population groups, with alternative measures proposed by the SPD focusing more on incentivizing work beyond retirement and boosting pension contributions.

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