On 14 March, the German Chancellor, Gerhard Schroeder, announced detailed plans to reform German labour law. The extensively discussed proposals are described by the employers’ representatives as “a first step in the right direction”, but definitely only a first step. In contrast, the unions view the proposals as the destruction of the German social security system and strongly oppose them. Taking aside the polemicised debate, the key question posed by the planned reforms for employers is whether the proposals of the Government will improve their position under the law.
The discussions to reform German labour law were triggered by increasing unemployment in the country, which has resulted not only in high costs for statutory unemployment benefits, but also in increases to the contributions that employed workers must pay into the other branches of the statutory social security system, particularly the pensions and health insurance systems.
