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German coalition agrees on sweeping reform package in key breakthrough
Al Jazeera • • general
Key Points:
- German Chancellor Friedrich Merz’s coalition has introduced a comprehensive reform package called the “Programme for Revival and Employment,” aiming to boost Germany’s economy and counter far-right political gains ahead of key elections.
- The package includes approximately €10 billion in annual income tax relief for lower and middle-income earners starting in 2027, funded mainly by increasing taxes on top earners.
- Reforms cover 34 measures such as pension system overhaul, stricter sick leave rules requiring immediate doctor’s certificates, extended fixed-term contracts, and reduced bureaucracy to support businesses facing economic challenges.
- Pension reforms will link retirement age to life expectancy after 2031, potentially raising it beyond 67 years, with legislative action expected by year-end.
- The reform package, described as one of Germany’s largest in decades, still requires parliamentary approval and faces scrutiny over potential revenue shortfalls from the Bundesrat.
