The German government has approved a substantial package of measures designed to safeguard the nation’s pension system and bolster adherence to collective bargaining agreements. The cabinet, led by the Social Democratic Party (SPD), formally adopted the legislative proposals on Wednesday.
A central element of the pension plan is the commitment to maintain the pension level at 48 percent of the average gross wage until 2031. Projections indicated that without intervention, this level would have eroded to 47.0 percent by 2031 and further to 45.0 percent by 2040. The government intends to fully finance these measures through the federal budget, with expenditures expected to reach double-digit billions of euros from 2027 onwards. The plan also includes the expansion of benefits for mothers, a provision that has previously drawn considerable debate.
Alongside the pension package, the government introduced a bill dubbed the “Tariftreuegesetz” (Collective Bargaining Loyalty Law). This legislation mandates that companies bidding for public contracts will be contractually obligated to comply with relevant collective bargaining standards when executing those contracts. The government’s stated goal is to strengthen the commitment to wage scales negotiated through collective agreements.
