German Employers Demand Major Reforms to Avert Prolonged Economic Crisis in 2025

Germany faces its longest economic crisis since the founding of the Federal Republic, with forecasts predicting only minimal GDP growth in 2025 after two consecutive recession years. Rainer Dulger, President of the Confederation of German Employers' Associations, has issued a stark warning about the urgent need for comprehensive reforms by the federal government to prevent a sustained stagnation period.

Dulger highlights the gravity of external geopolitical challenges, including Russia's war against Ukraine and rising authoritarianism globally, which make domestic reforms more pressing than ever. He calls for a substantial reduction in bureaucracy to grant more freedom to businesses and citizens, alongside social welfare reforms aimed at making the system more cost-effective, just, and precise. Furthermore, Dulger emphasizes the necessity to make work more attractive than unemployment to boost Germany's appeal to investors.

Chancellor Friedrich Merz has echoed these sentiments, announcing plans for deep reforms and the formation of a pension commission set to develop proposals by mid-2026, including considerations for later retirement ages. The coalition government has received a vote of confidence from business associations, but the message from employers is clear: without decisive and structural changes, Germany risks entering a prolonged crisis period with stagnating economic prospects.

The calls for reform underscore a critical juncture for Germany’s economic policy as it seeks to regain momentum in a complex and uncertain global environment.