Pension: Debate on later retirement age – praise from the business community

Berlin. Germans should retire later. This demand isn't new—but it's been hotly debated since Federal Minister of Economics Katherina Reiche (CDU) raised it again this weekend.

"Demographic change and the continuing increase in life expectancy make it unavoidable: Working life must increase," she told the Frankfurter Allgemeine Zeitung. "It can't be sustainable in the long run that we only work two-thirds of our adult lives and spend the other third in retirement."

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While there are many employees in physically demanding jobs, there are also many who want and are able to work longer hours, Reiche explained. Companies have reported to her that their employees at their US locations work 1,800 hours per year, but in Germany only 1,340. Reiche concluded: "Compared internationally, Germans work little on average." This puts an overburden on the social security systems.

“The combination of non-wage labor costs, taxes, and levies will make labor in Germany uncompetitive in the long run,” warns the minister – and announced that she would raise the issue again in the cabinet.

With her call for later retirement, Economics Minister Katherina Reiche has reignited an old debate: How long do we have to work? The question is legitimate, but too short-sighted – especially in the age of AI, comments RND capital correspondent Steven Geyer.

When asked why she hardly criticized the black-red pension package and the collective bargaining agreement law of Labor Minister Bärbel Bas (SPD), Reiche said: "Both draft laws have not yet been passed, but are currently being discussed in the government."

In her view, the reforms included in the coalition agreement "will not be sufficient in the long run." Bas wants to secure the pension level at 48 percent with billions of euros. While this was part of the SPD's election campaign promises, the "early start pension" and "active pension" programs from the CDU/CSU election platform made it into the coalition agreement.

Minister of Labour, Social Affairs and Pensions Bärbel Bas in July at the 11th meeting of the Federal Cabinet in the Federal Chancellery.

Source: Bernd Elmenthaler

The reactions to Reiche's initiative followed the expected pattern: it received support from employers, criticism from trade unions, social associations, the Greens and the Left – but also from the coalition partner SPD and the social wing of the Union.

The opposition in the Bundestag rejected the demand outright. "Economics Minister Reiche is seamlessly participating in the employers' campaign against the welfare state," said Left Party leader Ines Schwerdtner to the RedaktionsNetzwerk Deutschland (RND), accusing Reiche of taking sides with the business community: "When corporate lobbyists sit in government, the result is one-sided policies." This, she said, is not in the interest of the majority.

Schwerdtner added: "After 40 years of work, everyone should receive a poverty-proof pension and not be forced to continue working." She added that work in Germany is competitive because productivity is high and continues to rise, but also "because everyone – corporations and the population – can rely on a functioning infrastructure and a social safety net." "To jeopardize this due to short-sighted business thinking is irresponsible."

Source: Katharina Kausche/dpa

The Greens in the Bundestag accused the Minister of Economic Affairs of ignoring the already increasing working life expectancy: "The retirement age will gradually rise to 67 by 2031. The fact that Ms. Reiche simply ignores this shows that she is not oriented towards the reality in the country, but is instead spouting ideological rhetoric," parliamentary group deputy Andreas Audretsch told the RND. "Especially for many people who work physically hard, whether in care or as parcel deliverers, retirement at 67 is already difficult to achieve," the Green emphasized.

Audretsch called on the federal government to promote longer working hours on a voluntary basis and through more incentives, such as age-appropriate working time models and financial incentives. Women must also be given the opportunity to extend their working hours: "If women could work as much as they wanted, an additional 850,000 full-time equivalents of work would be created in Germany," the Green Party member told the RND. "To achieve this, incentives would have to be created in tax law and childcare facilities would have to be expanded."

The Social Democrats also refuse to discuss Reiche's proposal. Bundestag parliamentary group deputy Dagmar Schmidt, for example, believes Reiche is arguing with misleading figures on workload in Germany: "The overall economic workload has increased significantly since the mid-2000s," she told Funke media. "More people, especially many women, are working part-time. If they all quit their jobs, the average workload would increase."

The economic policy spokesman for the SPD parliamentary group, Sebastian Roloff, also emphasized that Germany needs more labor, “but this cannot be enforced across the board by raising the retirement age,” as he told “Spiegel.”

Katherina Reiche was always good for a debate. The Minister of Economic Affairs is currently making headlines with calls for later retirement. Her real job, however, is to end the recession. But how? Certainly, differently than her predecessor. Her recent visit to Lower Franconia demonstrates this.

But the opposition from within her own party was also sharp – at least from the social wing: Its federal deputy, Christian Bäumler, sees Reiche as an alien body in the federal government. Her demands have no basis in the coalition agreement, he said. "Anyone as Minister of Economic Affairs who fails to realize that Germany has a high part-time work rate and thus a low average annual working time is a misfit."

The German Social Association (SoVD) also voiced criticism. A possible belief that people could work longer should not lead to "a backdoor increase in the retirement age," said SoVD Chairwoman Michaela Engelmeier. Stabilizing the pension system could only be achieved through an employment insurance scheme that includes civil servants and members of parliament in the statutory pension scheme.

The German Trade Union Confederation (DGB) also warned against raising the retirement age. "For good pensions, more must come in from the pension insurance revenue side," said DGB board member Anja Piel. Major social tasks such as the mother's pension must be financed from tax revenue and not from the pension fund.

Meanwhile, the opposing side defended Reiche: "Economics Minister Reiche is speaking plainly – and that's a good thing," employers' association president Rainer Dulger told DPA. "Anyone who reacts with outrage now is refusing to face reality." The CDU politician is calling for a comprehensive reform agenda that also includes the social security systems. "The rendezvous with reality has begun in the federal government."