Reiche's pension proposal triggers fierce criticism – CDU politician speaks of "miscasting"

Federal Minister of Economics Katherina Reiche (CDU) is facing opposition with her call for a longer working life. Dagmar Schmidt, deputy leader of the SPD parliamentary group in the Bundestag, called Reiche's proposal "far removed from the reality of most people's lives." The German Association of Small and Medium-Sized Businesses declared that increasing productivity is more important than "a paralyzing coalition dispute over extended working hours."

Reiche told the Frankfurter Allgemeine Zeitung that working life must increase. Demographic change and the continuing increase in life expectancy make this "unavoidable." He added that "in the long run, it cannot be a good idea for us to only work two-thirds of our adult lives and spend the other third in retirement."

The minister also referred to the international comparison: companies reported to her that their employees worked 1,800 hours per year at the US location, but only 1,340 hours in Germany.

Reiche added that the reforms contained in the coalition agreement will not be sufficient in the long run. The social security systems are overburdened. "The combination of non-wage labor costs, taxes, and levies will make labor uncompetitive in Germany in the long run."

The initiative is not well received by all sections of her own party – the CDU's social wing (CDA) sharply criticized Reiche's statements over the weekend. CDA Federal Vice President Christian Bäumler said her demands had no basis in the coalition agreement. "Anyone as Minister of Economic Affairs who fails to realize that Germany has a high part-time work rate and thus a low average annual working time is a misfit," he said.

SPD parliamentary group vice-chair Schmidt told the Funke media group newspapers that it's already worthwhile to work beyond retirement age – for everyone who wants to. "Those who can't do so must be protected." For her, any extension of working life would be a pension cut. "That won't happen with the SPD." The German Trade Union Confederation (DGB) also warned on Saturday against "pension cuts through the back door."

The argument that workers have to work longer because they live longer cannot be applied across the board, Schmidt told the Funke newspapers. It is primarily people with higher incomes who have a longer life expectancy. "Once again, it would affect the wrong people."

Christoph Ahlhaus, Managing Director of the Federal Association of Small and Medium-Sized Businesses, told the Funke newspapers: "Corporate taxes and social security contributions should be reduced – and unnecessary bureaucracy should be eliminated." The federal government must enable companies to once again invest specifically in productivity.

Minister Reiche is right "when she says that we need to shift into high gear again in the economic decline battle," Ahlhaus continued. Above all, however, the economy must "finally become more productive again." Specifically, this means: "Achieving more when we can."

Like Reiche, Chancellor Friedrich Merz (CDU) had also called for Germans to work more. Economists Veronika Grimm and Monika Schnitzer reacted skeptically in May. Grimm said she saw particular potential in increasing women's participation in the labor market, for example, through improved childcare. Schnitzer cited the abolition of the tax allowance for married couples as a concrete measure.

Employers' Association President Rainer Dulger, on the other hand, responded positively. "Economics Minister Reiche is speaking plainly—and that's a good thing. Anyone who reacts with outrage now is ignoring reality," Dulger told the German Press Agency. The CDU politician is calling for a comprehensive reform agenda that also includes the social security systems.

"This shows that the federal government has begun its encounter with reality. A 50 percent social security contribution is not a promise, but a warning signal," Dulger said. Those who continue to bury their heads in the sand in the face of demographic trends are failing to live up to their responsibility to future generations. "Germany must work harder again to ensure our prosperity continues tomorrow," Dulger warned.