German Chancellor Olaf Scholz, Foreign Minister Annalena Birbock, and Economy and Climate Minister Robert Herbeck met in Berlin on October 16. Lisa Johansen (Reuters)
A record number of sick leave in 2024, an additional 1,000 euro lump-sum payment for long-term unemployed workers from January 1 next year, two consecutive economic recessions… where are we? Yes, it’s Germany. As the country trembles ahead of the fall 2025 vote (federal election), its government has been accused of championing laziness, and the government has been accused of championing inaction, embodied in the People’s Money introduced in January 2023 and loaded with negative connotations. equated with social policy…but no, it’s not the government’s fault (just). The reality is much more complex. It’s about economics. It’s the economy, idiot. Germany will decline by 0.2% this year, compared to -0.3% in 2023. Opposition parties are blaming the government. Government, to the previous government (Merkel). And the coalition governments hesitate to blame each other.
The proposal (which has not yet been approved) is as follows: From January 1, a lump sum of 1,000 will be given to people who have worked for at least one year and are on a moderately low wage, and who were previously paid a salary. Provide euros. Be unemployed for more than one year. It aims to compensate those who have lost their right to social assistance (so-called national money), which is available to those on low wages (less than 538 euros per month). The reaction… the Yellow Paper (Bild Zeitung) describes it as follows: “A feat of lifting the buttocks…” Christian Democratic politicians speak of “ridiculous ideas” and “jokes.” The aim of the author of this proposal, Minister of Economy Robert Habeck, is to create practical measures to motivate work and training for work. Many long-term unemployed people have little or no qualifications.
At the same time, jobs seem to be becoming less and less available. According to the OECD, it has fewer hours than Spain. Additionally, this month Social Security (insurer AOK) released data on sick leave through August 2024. Never before have there been so many sick workers. In the first eight months, 225 layoffs were recorded for every 100 employees, the same number as in all of 2023. Attitudes are changing due to the pandemic. as well as the willingness to request sick leave (data from insurance company Pronova BKK).
According to the weekly magazine Focus, some companies are experimenting with so-called “Null-Bock-Tag” measures, where employees can call the workplace to let them know they haven’t worked. It will be possible to report. Encouragement and strength to work. The aim is to realize the benefit of not having to put up with grumpy or absent people in the office. Focus notes that a growing number of companies (LinkedIn, Google, Microsoft, Nike, and German consulting firm Einhorn) are offering this option to help people take time off when they feel stressed or unmotivated. With the current surge in sick leave, Null-Bock-Tag is not viable because this leave would be in addition to vacation and sick leave. In 2023, the population decreased by an average of 15.1 days. In the past (2014-2021 period), the number of cancellations per year was constant at 160 per 100 insured persons.
Süddeutsche Zeitung analyst Kerstin Bundt argues that all of these data reflect collective dismay over the economic, industrial and business crisis affecting Europe’s leading powers. There is. Klaus Michelsen, an economist at the pharmaceutical industry association, argues that without so many job losses, Germany would not have fallen into recession in 2023. Similarly, the number of workers absent from work due to mental illness is on the rise, increasing by 50% over the past decade.
So far, its huge economy is resisting, but the challenges are also huge. Green Minister Herbeck recognizes that the proposals contained in the current economic growth plan will be followed by further plans and further measures as global economic risks continue to tighten their grip on Germany.
January marks three years since the then newly appointed economy minister wanted to redefine economic growth and include variables such as welfare and sustainability in a social and ecological market economy. A month later, Russia declared war on Ukraine. From then on, only numbers mattered. And the numbers don’t work either. Michael Bauchmüller, an editorial writer at Süddeutsche Zeitung, points out that these numbers are fueling a collective depression stemming from the pandemic and Putin’s war. It is forgotten that the government of Prime Minister Olaf Scholz and Deputy Prime Minister Habeck overcame a severe energy crisis and built a pillar of climate neutrality. “Habeck is fighting to protect the Green Party’s pragmatic centrist political position. But if Germany does not grow, there will be growing anxiety about the future among the middle class.” It’s the fear that feeds: fear of the future and fear of losing happiness… It’s the economy, it’s stupid, a key slogan of President Bill Clinton.
Another problem is the rising unemployment rate. This is not due to the attractiveness of social assistance or national money, but to the weakness of the economy. Although there is a shortage of qualified personnel in some sectors of the economy, it is not an absolute shortage that affects the entire labor market. The question, then, is how to stimulate the economy to create more high-wage jobs.
The government does not expect the economy to get back on track yet. Although 2024 will end with a slight decline of 0.2%, it is expected to grow slightly in 2025 (1.1%) and 2026 (1.6%). Wage increases have not been passed on to consumption. Companies invest very little for several reasons. Reasons include high energy costs, business and profit concerns, and structural changes in the economy. But Habeck believes the economy will improve if the government can implement a growth plan that financially encourages business investment, encourages retirees to return to the labor market and bets on qualified foreign workers. . It also aims to reduce bureaucracy and lower energy prices for production.
The government defends itself by saying that the current problems come from far away. The commission notes that the economic situation is complex, with economic risks (e.g. in Ukraine) and structural issues such as demographic impacts on employment (experts retiring without replacements), public investment deficits, and fiscal deficits. recognizes that Germany has grown little since 2018. High costs due to private companies, the costs of the green transition, increased global competition in the German-made sector (automobiles) and high taxes. Added to this is the geopolitics of the 21st century, characterized by blocs, from which risks such as unilateral economic dependence (China) and supply chain vulnerabilities arise.
The German government, which has been accused of playing blind, is trying to provide answers. But the key lies in the economy. It’s the economy, idiot… The economy is becoming the downfall of the Minister of Economy and the Scholz government. This is also due to the lack of consensus within the Berlin coalition on the government’s economic policy priorities.
Lydia Conde Batala is a journalist and German economic and political analyst.
