A recent survey conducted by the Federation of Family Businesses revealed that the majority of mittelständische family-owned companies will not be able to fund the tax-free relief premium of up to €1,000 for their employees. According to these findings, reported by the “Rheinische Post”, 57 percent of businesses intend to forgo paying the premium, 31 percent plan to pay only partially, and only 12 percent will pay the full amount. Marie-Christine Ostermann, the federation’s president, criticized the government for introducing what she called an “affordability gap” effectively shifting the costs of relief onto businesses during what she described as Germany’s longest economic downturn since World War II.
Looking toward addressing high energy costs, Ostermann advocated for a completely technology-neutral energy policy that could incorporate the construction of small nuclear power plants. She stated that it is untenable to continue subsidizing the solar industry after three decades. Furthermore, she explicitly endorsed Economics Minister Reiche’s efforts to end these subsidies and called for the lifting of the core ban on nuclear power.
Ostermann also issued sharp criticisms regarding the economic policies of CDU leader Friedrich Merz. While acknowledging that geopolitical crises complicate the situation, she argued that much of Germany’s economic struggle is self-inflicted. She insisted that solving the crisis requires immediate structural reforms, including reducing taxes and energy costs, modernizing the social security system, and radically cutting bureaucracy. Although Merz has promised significant relief, Ostermann noted that tangible progress is absent, and some businesses are actually facing additional burdens. She concluded that Merz performed well in foreign policy, but now he must succeed as the Minister of Economics to initiate the vital industrial transformation.
Regarding their political relationship, Ostermann stated that while she appreciates Merz’s understanding of the economy, her disappointment after a year of stalled action is profound. She cited ongoing insolvencies, job losses, and foreign investment outflows, warning that the failure of the Mittelstand could not and must not be accepted.
On the political sphere, Ostermann suggested that Merz retains the potential for effective leadership within the CDU. However, she cautioned that if deeper reforms are continuously blocked by coalition partners, Merz should be prepared to call for a vote of confidence in the Bundestag, even though this would be highly dramatic following the failure of the last cabinet coalition. She contended that without economic restructuring, Germany’s decline is inevitable.
On specific policies, Ostermann demanded a comprehensive pension reform to ensure the system’s long-term viability for younger generations. She called for a reversal of early retirement trends through visible penalties for early withdrawal and increased incentives for men and women to work longer. Crucially, she mandated that the retirement age must be linked to life expectancy, and the sustainability factor must be reintroduced to dampen rising pension costs. To prevent pension contributions from perpetually rising for employees, she suggested reviewing or restructuring the funding for specific benefits, such as the mothers’ pension or the 63-year pension.
Concerning tax reform, Ostermann argued that an income tax overhaul is urgently needed to make work more lucrative. However, she pushed back against financing proposals that burden the upper income brackets. She warned that a higher top marginal tax rate would severely impact SMEs, many of which operate as family businesses. For these companies, income tax essentially functions as corporate tax, and the existing high total tax burden is already throttling investment. Increasing wealth taxes would act like an unwelcome investment tax during a crisis.
Finally, addressing the cost of living, Ostermann proposed systematic reduction of subsidies, calling for a mandatory starting cut of 10 percent across all federal subsidies and financial aids, which total nearly €80 billion annually. She also emphasized the need for the coalition to uphold its commitment to reducing 8 percent of all federal jobs during this period, stressing that nothing to this effect has been seen yet.
