Business and employers' associations adopt joint declaration on government's reforms

In March 2004, Germany's four central business and employers’ associations (BDA, BDI, DIHK and ZDH) issued a joint declaration on the government's recent labour market and social policy reforms. They endorsed these changes, in principle, but called for further amendments.

On 5 March 2004, Germany's four central business and employers’ associations - the Confederation of German Employers’ Federations (Bundesvereinigung der Deutschen Arbeitgeberverbände, BDA), the Confederation of German Industries (Bundesvereinigung der Deutschen Industrie, BDI), the German Association of Chambers of Industry and Commerce (Deutscher Industrie- und Handelskammertag, DIHK) and the Central Chamber of Crafts (Zentralverband des Deutschen Handwerks, ZDH) - held their regular annual meeting, in Munich. They issued a joint declaration with regard to the government's recent 'Agenda 2010' reforms of labour market and social policies (DE0303105F and DE0401205F).

The joint statement asserts that: 'Together with the federal government we are of the opinion that these measures are a necessary precondition - but by no means go far enough - to secure Germany’s competitiveness and, thereby, to set free forces for growth and employment. We will support the government as long as, first, the necessary structural reforms improve, in a lasting way, the climate for investors and consumers and, second, the burdens - taxes, social security contributions and bureaucratic burdens - on individuals and firms are lessened.'

The most important points of the joint declaration, in terms of industrial relations and the labour market, are as follows.

• 'Firms and individuals must be permanently unburdened by reducing [the highest] tax rates to under 35%. At the same time, the decrease in subsidies must be ... continued.'

• 'In order to reduce the total burden of social security contributions to under 40% of an employee’s gross wage, social security systems should be transformed so that they provide basic levels of social security only. Social security systems must be made demographic-proof by increasing privately funded pension provision, and, thereby, uncoupling, as far as is possible, social security systems from labour market contracts. Concentrating unemployment insurance on its key objectives and and the deregulation of employment promotion laws would make an immediate reduction in the contribution rate possible. The reform [DE0402101N and DE0311101N] of the Federal Employment Agency [Bundesagentur für Arbeit, BA] must be resolutely pursued and intensified.'

• 'New labour market policies must increase employment. Current labour law is complex and can only be applied by specialists. It, together with tax laws, needs to be fundamentally simplified and debureaucratised. A modern labour market regulatory system also needs a new collective bargaining law [DE0312202F] that would, first, create more room for manoeuvre in industry-wide collective agreements, and, second, enable alliances for jobs at the firm level to be set up legally. The inappropriate incentives to remain unemployed that still persist despite the merging of unemployment assistance and social assistance, and that also continue within the unemployment benefit system, must be resolutely removed. The measures are necessary in order to unburden the production factor labour, and, thereby, create employment and growth. Of equally decisive importance is the need to increase Germany’s productivity and its ability to compete; this can be achieved by increasing investment in innovation, education and research. Such an increase would be in agreement with aims of the Lisbon strategy of the European Union and is even more appropriate in the light of the imminent enlargement of the European Union and continuing globalisation.'

• 'A long-lasting improvement in the level of schools, colleges and vocational training is essential. In a knowledge-based economy, it must be the goal of education policy to facilitate public and private investments in education that suit every individual. Moreover, individuals will have to accept more responsibility for their own education throughout their adult lives. In providing vocational training, businesses will have to focus on the needs of markets - that is, the needs of tomorrow’s markets. ...politicians will ... have to accept that, in economic sectors with poor growth rates, the numbers of jobs will decrease, and that, in those sectors with strong rates of growth, new jobs will be created. An apprenticeship tax levied on those firms that do not provide apprenticeship places [as is currently being considered by the government] is anathema to this process. Such a tax will not only, eventually, lead to the nationalisation of vocational training, but will also act to hobble innovations as well as to stifle firms’ interests in offering as many apprenticeships as possible ... The better the economic environment and the better the economic policy framework within which firms operate, the more apprenticeships will be offered.'

• 'In addition to an increase in public expenditure, ensuring that firms operate in an environment that is conducive to investing in innovations will be of decisive importance in attaining the goal of 3% [in terms of expenditure on research and development by 2010].'