Leaked Savings Paper Stings as Germany’s Coalition Pushes Reforms Ahead of Summer Recess

Leaked German Chancellery paper sparks 'antisocial austerity' accusations as coalition eyes labour, pension, and tax reforms before summer break.

A working paper from the German Chancellery that surfaced ahead of a landmark summit has drawn fierce accusations of an “antisocial austerity agenda” from the Left party, just as Chancellor Friedrich Merz was set to host employer and union representatives for talks on labour, pensions, and red tape.

The meeting, scheduled for 10 June 2026 at the Chancellery, aims to forge a reform package that the coalition wants to finalise before the summer break begins on 10 July. While the gathering is not officially a coalition committee session, it is widely seen as setting the direction for the next regular committee meeting on 30 June, when final decisions are expected.

Work-time overhaul sparks union outcry

One of the most contentious items on the table is a shake-up of the Working Hours Act. The government wants to replace the current daily maximum with a weekly limit, a move that DGB chairwoman Yasmin Fahimi slammed as “an ideologically driven step backwards” that could open the door to shifts lasting up to 13 hours.

Labour Minister Bärbel Bas (SPD) has tied any relaxation of the eight-hour day to strict conditions. She insisted that no change should be imposed against employees’ wishes, and demands mandatory electronic time-tracking, while limiting any flexibility to companies bound by collective bargaining agreements. Coalition partners remain divided on the issue.

Mandatory company pension back on the agenda

On pensions, the government is weighing a compulsory occupational pension scheme. Fahimi noted that around 20 million workers currently have no employer-provided retirement plan. Finance Minister Lars Klingbeil (SPD) signalled support for the proposal yesterday. While the CDU’s labour wing (CDA) backs the idea, the CDU’s business council rejects it. An expert commission is due to present further reform proposals by 28 June.

Unions have also put forward their own tax concepts. The DGB wants relief for 95% of employees and a wealth levy: 10% on net assets exceeding €10 million. Minister Bas, for her part, is demanding a tax cut of at least €500 per year for workers.

Business groups push for competitiveness – but the Left warns of cuts

Employer associations BDA, BDI, DIHK, and ZDH are urging a decisive overall package to boost competitiveness. The retail association HDE has warned that labour costs are set to rise further.

The Left party’s parliamentary group leader, Heidi Reichinnek, pointed to the leaked Chancellery paper, which lists numerous savings measures, including potential cuts to integration assistance for children with disabilities and a delay in the legal entitlement to all-day childcare. She described the plan as an “antisocial austerity course.”

Young people’s patience wears thin over Bafög delay

Separately, the DGB has sounded the alarm over delays to the Bafög student-aid reform. DGB deputy chairwoman Elke Hannack warned yesterday that young people’s disenchantment with politics is growing as the overhaul stalls. The coalition plans, among other things, to raise the housing-costs allowance from €380 to €440 per month starting with the next winter semester.