The green light from the Budestag

Germany: pension reform passes, but for Merz it is a half victory

The measure, which stabilises social security benefits and raises those for working mothers, passes scrutiny after weeks of disagreements within the chancellor's party. Doubts are growing about the resilience of the coalition between Cdu-Csu and Spd and its ability to lead the country out of economic stagnation

by Gianluca Di Donfrancesco

Il cancelliere tedesco Friedrich Merz (EPA)

3' min read

Translated by AI
Versione italiana

3' min read

Translated by AI
Versione italiana

The Bundestag has approved the controversial pension reform presented by the government, but Chancellor Friedrich Merz can only breathe a sigh of relief: the vote on 5 December certainly clears the most challenging hurdle since he took office, but it does not erase the weeks of clashes within his own party, the Cdu-Csu Union. This time it was the 18 deputies of the youth group who put their foot down, against a reorganisation that would put the burden of the pension system on the shoulders of future generations.

Doubts about the coalition

More important than the content of the reform, then, is the proof offered by the coalition and the chancellor. The resistance of the young people in the Union, which has only partially returned out of a sense of responsibility, has once again highlighted how hard it is for the leadership of the conservatives to impose itself within its own party. And it has allowed dangerous speculation on the tightness of the coalition with the social democrats of the SPD, considered the last embankment against the takeover of the government by Alternative für Deutschland, the pro-Russian movement and considered extreme right-wing, already leading in several polls. The German media have bounced back with scenarios of a break-up of the black-red pact and a possible minority government, barely seven months after Merz took office, from whom a change of pace was expected compared to Olaf Scholz's quarrelsome Semaphore coalition, prematurely blown up.

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The 'chancellor's majority'

Until the eve of the vote, Merz and his men tried to convince the 'rebels' to change their minds and support the package of measures agreed with the SPD in the government pact. With 316 seats, the 'small' black-red coalition has a margin of just 12 votes in the Bundestag and the 'no' vote of the 18 young people could have been fatal. As icing on the cake, on Wednesday came the Linke's offer of help, with the announcement that its 64 MPs would abstain. This would have dropped the majority required to pass the reform, making the vote of the young Union members unnecessary. The prospect of saving their skins with the help of the Linke would, however, have been a bitter pill for the party, which had already had to swallow it on the day of the chancellor's inauguration: the first attempt failed resoundingly and an irritating second vote was needed on the same day, made possible thanks to the collaboration of the Linke itself. Konrad Adenauer's Christian Democrats never wanted to make deals with the descendants of the communists in the East.

In the end, the pension reform passed with 318 yes votes, thus exceeding the absolute majority and making the Linke's abstention irrelevant. The 'chancellor's majority' so much pursued by Merz was achieved, but only by a whisker: ten votes short of the coalition's 328. Seven of the 208 Cdu-Csu deputies voted against, two abstained and one was absent. Compact were the 120 Spd deputies, for whom a red line was at stake.

The affair leaves a darker cloud over Merz's ability to lead the country out of the long stagnation, as political scientist Johannes Hillje points out: 'Today the chancellor is a weakened winner. The debate has exposed the limits of his authority'.

Contents

The reform has been strongly criticised by leading economists also (but not only) for its costs: pension expenditure increases by about EUR 185 billion over the next 15 years. The package stabilises the level of pensions, increases benefits for mothers who stay out of work to care for their children, strengthens occupational pensions and provides incentives for pensioners to work.

The main intervention is the stabilisation of pensions. In Germany, allowances are linked to the average wages of workers. The reform fixes them at the current level of 48 per cent until 2031, averting the decline that would otherwise have occurred. The federal budget will cover the additional costs: almost 24 billion between 2029 and 2031 and an estimated 120 billion more from there to 2039. Next year, a commission of experts will have to propose further reforms to balance the system, including the possible raising of the retirement age beyond 67.

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