Losing 10,000 Factory Jobs a Month, Germany's Government Unveils Divisive Labour and Tax Overhaul
Published on 07/03/2026 at 02:22 | Redaktion boerse-global.de
Germany is shedding more than 10,000 industrial positions every month, a figure BDA general secretary Kampeter cited as he welcomed the government's new 34-measure reform package — the most sweeping attempt in years to jolt the economy out of stagnation. Yet the same plan that employers call overdue has drawn fierce condemnation from unions and doctors, who say it attacks workers' rights and piles bureaucracy onto already strained medical practices.
At the centre of the package is a radical loosening of fixed-term employment rules. From now on, employers can offer contracts without a specific reason for up to 48 months, and until the end of 2030 they may extend such contracts as many as six times. That change alone has prompted the DGB and IG Metall to denounce the reforms as an assault on job security.
The coalition also tackled sick-leave policy. Phone-based doctor's notes, a convenience introduced during the pandemic, will be scrapped. Employees must present a medical certificate starting from the first day of illness, though individual workplaces may deviate from that rule. Complementing that stricter approach is a novel instrument: part-time sick notes that allow workers to perform 25, 50 or 75 percent of their usual duties rather than staying home entirely.
High earners face a different kind of shake-up. Those with monthly salaries above €15,000 will see their dismissal protection eased. And anyone who receives a severance payment when switching jobs gets new tax advantages. At the top of the income scale, the so-called wealth tax is being split into two new brackets: 45 percent applies from €250,000, and 47 percent from €280,000. The basic top rate remains at 42 percent.
Families are supposed to benefit from tax relief worth roughly €10 billion. The full effects will be felt from 2028, but the first reductions take effect in 2027. According to the coalition's own calculations, a family of four with a gross income of €60,000 could save more than €600 per year starting in 2028. To finance those cuts, the state development bank KfW will transfer €500 million to the federal budget in both 2027 and 2028.
Reactions among economists are split. The German Council of Economic Experts' Felbermayr called the reforms forward-looking. DIW president Fratzscher dismissed them as symbolic politics that lack ambition. Ifo chief Fuest cast doubt on whether the tax changes will have a decisive impact, though he acknowledged they could help overcome stagnation.
Beyond labour and tax, the package targets bureaucracy. The DIHK described the planned reporting-burden brake as a genuine breakthrough. Employers' president Dulger said the direction was overdue but complained that high-performing workers are not being relieved enough. Verdi's chairman Werneke labelled the entire project an expression of a culture of mistrust.
Medical associations warned of a massive wave of extra paperwork at GP practices. The German Association of General Practitioners and the National Association of Statutory Health Insurance Physicians argued that demanding a doctor's note from day one is medically counterproductive.
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