FDP announces social reform stop – and what do SPD and Greens say about it?

According to Christian Lindner, there is a simple reason why the traffic lights are sometimes a bit louder: In the coalition, people hammer and screw. That led to noise, but also to decisions, said a decidedly down-to-earth leader of the FDP and finance minister after the closed conference at Schloss Meseberg.

The fact that Lindner also hammered in a stake, which is unlikely to help calm the background noise, was almost forgotten during the report from the reform workshop.

Very close

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Two days earlier, Lindner had clarified something in the presence of Family Minister Lisa Paus (Greens) and Labor Minister Hubertus Heil (SPD). The dispute over basic child security has been settled, and family benefits are coming together. But: The “most comprehensive socio-political reform for many years”, as Paus said, will also be the last, Lindner sent afterwards. At least for the time being: The budget would not give more, said the finance minister on Monday.

So that there is no doubt about the FDP’s position, Secretary General Bijan Djir-Sarai has now knocked the stake a little deeper into the ground. “The basic child security is the last major socio-political reform of this legislative period,” he told the “Bild” newspaper on Thursday, almost verbatim to his party leader. In the face of inflation and high interest rates, there should be no expansion of the welfare state. “Now it has to be about making money,” Djir-Sarai demanded.

The double message is clear: the end of the money distribution, now it’s time to keep the money together with a steady (and liberal) hand. However, it is questionable whether the coalition partners will heed the call for order.

At the beginning of April, FDP leader Lindner declared the end of the “pure distribution policy” after the International Monetary Fund (IMF) had warned of a shrinking German economy. The warning has now become a prognosis. What may be unflattering for Germany as a business location is likely to have played into the finance minister’s cards: when preparing the budget for 2024, the forecast provides him with an additional argument to smash the excessive spending requests of his coalition partners. In the protracted struggle for basic child security, it obviously worked – measured against the high expectations that the Greens in particular had of the social reform.

However, Lindner cannot count on the coalition partners to calm down. The SPD and the Greens are campaigning for more investment (and less rigorous austerity measures), but they don’t want to adopt the FDP’s announcement that it will no longer undertake major social reforms.

Especially in view of the increasing shortage of skilled workers and workers, investments in the welfare state are also investments in Germany as a business location, said Martin Rosemann star. “By the way, it would be news to me that the Secretary General of the FDP could simply delete projects from the coalition agreement,” added the spokesman for labor and social policy for the SPD parliamentary group. He is thinking, for example, of the pension package that will be implemented “of course as agreed” in this legislative period. “As far as I know, the FDP is also very interested in this reform project,” said the SPD MP.

In the coalition agreement, the SPD, Greens and FDP had agreed to secure the current minimum pension level of 48 percent “permanently”. Pension cuts and an increase in the statutory retirement age should not exist. Finance Minister Lindner and Labor Minister Heil are currently working on a reform concept for the long-term stabilization of pensions. One of the plans is to cushion a future increase in premiums through income from investments in the stock market. It is unclear when exactly their draft will be available.

Meanwhile, the Greens see a whole range of socio-political projects that were agreed in the coalition agreement and will be implemented according to their ideas. Frank Bsirske, parliamentary group spokesman for work and social affairs, also mentions the stabilization of the pension level, but also improvements in the topic of inclusion or the digitization of social benefits.

As far as “major socio-political reforms” are concerned, the Green labor market expert has almost nothing to complain about: the two major projects agreed in the coalition agreement have either been introduced (citizen’s allowance) or are now being implemented (basic child security). But: “We could do without the third and last social reform planned by Lindner and Heil,” said Bsirske star. “We don’t think it makes sense for the care of the under-25s to be transferred from the job centers to the employment agencies.” This worsens the situation of young people and puts a strain on the unemployment insurance budget.

The cabinet initiated the change with the resolution on the Budget Financing Act in August. Accordingly, from 2025, young unemployed people should no longer be looked after by the job centers but by the employment agencies. The project is also controversial because it apparently serves to meet Finance Minister Lindner’s savings targets. The relocation is intended to relieve the budget of the labor department by around 900 million euros – ultimately at the expense of unemployment insurance, which is borne by contributions from employees and employers.

It should therefore not be much quieter in the traffic light reform workshop in the future either. After the end of the parliamentary summer break, the Bundestag will meet again in the first week of September. First of all, the budget week should be about money.