Legislative Deadlock Threatens Key Economic Reforms in Germany
A pair of pivotal economic reform bills, the Trade Union Loyalty Act and the Procurement Acceleration Act, are facing increasing uncertainty regarding their passage before the year’s end, according to reports from Politico, citing sources within parliamentary factions. The bills, originally slated for completion in 2025, appear to be entangled in a political impasse, jeopardizing timelines and raising questions about the government’s capacity to implement crucial economic policy.
Following a cabinet decision in the summer and initial readings in October, the legislative process has stalled. This standstill has significant implications for the Special Fund, projected to allocate nearly €60 billion in 2026, which will now be disbursed under existing, potentially outdated, procurement rules. Negotiations on the Trade Union Loyalty Act have reportedly been suspended between the Social Democratic Party (SPD) and the conservative Christian Union (CDU), despite nine preliminary discussions failing to yield a breakthrough.
Disagreements over three central points are reportedly at the heart of the deadlock. The draft legislation proposes that either a trade union or an employer’s association could apply for the determination of collective bargaining conditions, governed by a regulatory ordinance from the Labour Ministry. The CDU, however, insists on a joint application from both parties. Furthermore, the current draft requires only the approval of Labour Minister Bärbel Bas (SPD) for the determination of these conditions, a provision the CDU is pushing to change, advocating for blanket approval by the entire cabinet. A third contentious point involves the CDU’s demand to exclude the retail sector, echoing practices already implemented in several German states.
The Procurement Acceleration Act faces its own set of challenges. Reports indicate that several critical talks on the CDU side have been disrupted by illness. Experts also criticize the proposal to divide projects into smaller lots to facilitate the participation of medium-sized enterprises, questioning whether this approach will genuinely accelerate the overall procurement process. The issue has sparked internal discussions within both factions regarding the prioritization of either comprehensive procurement strategies or a segmented approach designed to support SMEs.
The emerging failure to advance these legislative packages is drawing criticism, with some observers suggesting it reflects a broader inability of the ruling coalition to navigate complex political disagreements. The stalled progress casts a shadow over the government’s commitment to reforming labor practices and streamlining public procurement, potentially impacting Germany’s economic competitiveness and its capacity to address critical future investments. The responsibility for resolving the impasse has now shifted to the parliamentary faction vice presidents, signaling a period of potentially protracted negotiations and uncertain outcomes.
