Incoming German Chancellor Friedrich Merz has conceded that rising social security contributions could strain net earnings for German workers.
Friedrich Merz, Germany’s presumptive next chancellor, has warned that citizens may experience a reduction in their take-home pay during his tenure due to increased social security payments and potential delays in tax relief.
In a Bild interview on Sunday, Merz addressed worries about escalating pension, health, and long-term care costs outpacing reforms and negatively affecting household incomes.
“Unfortunately, that’s precisely what is happening,” Merz stated. “We have neglected to implement necessary reforms over the past three decades.”
When questioned about the possibility of reduced disposable income for citizens, Merz responded, “From the current standpoint, these concerns are certainly valid. However, it will be our responsibility to allay these fears and take appropriate action so that, by the end of this legislative period, people can say: We are in a better financial situation than we were at the start.”
According to Merz, the coalition agreement between his Christian Democrats (CDU/CSU) and the Social Democrats (SPD) includes maintaining the pension guarantee – ensuring pensions remain above a certain level – until 2031.
Merz indicated that the coalition intends to pursue health and long-term care reforms in the coming years, which are expected to increase costs for households.
Merz also confirmed that the CDU/CSU and the SPD have not yet reached an agreement on income tax relief for workers, but mentioned the coalition’s commitment to lowering corporate taxes.
When questioned about whether his party had broken election promises regarding the “debt brake,” Merz acknowledged the criticism. Despite the CDU’s previous support for constitutional limits on government borrowing, Merz’s bloc and the SPD proposed a €1 trillion debt-financed spending package for defense and infrastructure after the election.
“I understand the criticism. This [debt package] is justifiable only if it’s coupled with the reforms Germany urgently needs. I believe we’ve included the appropriate measures in the coalition agreement,” he said.
Merz is anticipated to be formally confirmed as chancellor in the coming weeks as coalition negotiations with the SPD progress. His remarks come as an Ipsos poll reveals public support for his CDU/CSU bloc at 24%, with the right-wing Alternative for Germany (AfD) surpassing it by 1%.
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