Germans urged to work harder and longer by Reiche
In the face of demographic changes and increasing life expectancy, Germany is grappling with the need to adjust its retirement and workforce policies. Economic Minister Katherina Reiche, a member of the CDU party, has been a strong advocate for extending working hours and raising the retirement age to ensure the sustainability of the pension system and maintain Germany’s economic competitiveness.
The rationale for these proposed changes is twofold. Firstly, the current retirement system has not kept pace with the rise in life expectancy. Historically, retirees received pensions for about 10–11 years after approximately 45 years of work. Today, pensioners often receive benefits for over 20 years after fewer working years, resulting in a lower work-to-benefit ratio that strains the system.
Secondly, Germany’s average annual hours worked (approximately 1,340 hours) lag behind countries like the U.S. (around 1,800 hours). This gap is considered a disadvantage for German labor competitiveness. Reiche emphasizes that increasing working hours is needed alongside extending the working life.
However, these proposals have not been met without resistance. Workers' associations and trade unions, including the German Trade Union Confederation (DGB), argue that pension sustainability should come from increased contributions rather than higher retirement ages. They suggest that tax revenue should also cover social benefits, especially those benefiting society at large, such as pensions for mothers.
Some political figures within Reiche's own party have also expressed reservations about her approach. A significant portion of the public remains divided, with a recent survey showing that 54% of German workers would be willing to work beyond the legal retirement age (mostly part-time and up to age 70) to maintain their living standards, as many anticipate insufficient pension income. However, a significant portion remains opposed to working longer.
Extending working hours and retirement age could help reduce the financial burden on social security systems and improve pension fund sustainability. However, it raises concerns regarding the capacity of older workers, especially those in physically demanding jobs, to continue working longer and the social fairness of such reforms.
Reiche acknowledges these concerns but also emphasizes that many people want and can work longer. She calls for the stopping of incentives for early retirement and the creation of incentives for working longer. She warns that the pension, health, and long-term care insurances in Germany are reaching their limits and are overloaded.
In a recent statement, Reiche stated that the coalition agreement is binding, but also noted that what is in the agreement in terms of reforms will not be enough in the long run. The focus of her statements is on the need for cost reduction and a "reality check" of the energy transition.
Sources: ntv.de and mpa.
- The Community policy, as proposed by Economic Minister Katherina Reiche, includes increasing working hours and raising the retirement age as solutions to address the financial burden on social security systems and improve the sustainability of pension funds.
- In the face of resistance from workers' associations and trade unions, who suggest that pension sustainability should come from increased contributions rather than higher retirement ages, Reiche emphasizes the importance of creating incentives for working longer and the need for cost reduction, particularly in the energy sector.
