The first meeting of the concerted action in the Chancellery ended with commitments to joint action. “The current crisis will not be over in a few months,” said Chancellor Olaf Scholz (SPD) on Monday afternoon. That is why you will meet with employers and unions more frequently in the coming months.
Scholz spoke of a “historic challenge”, employers’ president Rainer Dulger of the “hardest economic and socio-political crisis since reunification”. “Our country is characterized by a fair balance of interests,” said Scholz. The message is therefore important to him: “We stand together and want to develop a spirit that will carry us through this time.”
The DGB chairwoman Jasmin Fahimi spoke of a “historical precedent in which a joint effort is required”. The burden on private households from the high energy prices alone went well beyond the previous relief, which Scholz put at 30 billion euros. “It’s about the perspective of 2023,” said Fahimi. A recession must be avoided. According to Dulger, the causes of inflation are energy costs, scarcity of raw materials and supply problems. “Wages are currently not a driver of inflation,” said the employer president.
In the coming months, the bargaining parties would have to answer the question, “How can we absorb some of the inflation for employees,” continued Dulger. Politicians can help by tackling the cold progression in the income tax rate and reintroducing the corona premium.
The trade unions reject the reduction in the tax rate because higher incomes benefit disproportionately from it. “We don’t know which fire to put out first,” Dulger described the situation in the companies. “So now is the time to look for solutions together.”
Scholz: No further aid in 2022
As participants in the meeting then told the Tagesspiegel, Scholz has not announced any further relief. Also not for pensioners and students who do not get the energy bonus of 300 euros. Finance Minister Christian Lindner (FDP) addressed the reintroduction of the corona bonus, but without going into details or even naming a date. “Now papers are being written first,” said one participant in the Tagesspiegel.
We meet again in September. Then the wage dispute in the metal industry begins. IG Metall is calling for a wage increase of eight percent for almost four million employees.
Six measures can be considered
Six measures are being discussed as part of possible further state aid. Scholz himself had preferences for the exemption from tax and contributions for one-off payments by the employer, such as the corona bonus that existed until March of this year. One-off government payments in the form of an energy allowance (300 euros to all employees) and a child bonus (100 euros to recipients of child benefit) have already been agreed and will be paid in July (child bonus) and September (energy allowance). This could happen again in a few months.
A premature increase in the standard rate for basic security, which is currently only planned for the beginning of 2023, is one of the possible aid measures, as is a reduction in VAT for food. A gas price cap for basic consumption is advocated primarily by trade unions, and dampening the tax progression by employers.
Tariff increases stay below inflation
In view of the gas prices but also because of the high food prices, further financial aid would have to “come in the fall and last well into next year,” Verdi boss Frank Werneke told the Tagesspiegel before the meeting. In some sectors of the economy, employees “only earned around 2,500 euros, some even less. The need is huge,” Werneke argued. For his trade union, he announced a collective bargaining policy that would “compensate for permanently rising prices” with “permanent collective wage increases”.
But not even IG Metall, which recently pushed through a wage increase of 6.5 percent for the very well-paid steel industry. It’s the sharpest increase in 30 years, but with inflation above 7 percent, even steelworkers are losing purchasing power.
“For Christian Sewing, head of Deutsche Bank, high inflation is “poison” for society. When surveys show 40 percent of people that they can no longer save, that threatens social peace, Sewing said. Should there be a gas embargo in the course of the Ukraine war, there will be a “deep recession”, said the head of Deutsche Bank.
He would like the European Central Bank to “raise interest rates faster than expected”. In the eurozone, consumer prices rose 8.6 percent year-on-year in June. In Germany, they were 7.6 percent above the level of the same month last year.