Germany’s proposed tax breaks for skilled foreign workers are “socially dangerous”, say the opposition and trade unions.
After months of political wrangling that threatened to collapse Chancellor Olaf Scholz’s ruling coalition, the German government has agreed on a draft budget for the country’s 2025 budget.
One point in it caused a lot of disagreement in particular. This is Economy Minister Robert Habeck’s idea of giving tax breaks to skilled foreign workers to address Germany’s labor shortage. Habek expressed the opinion that tax discounts (30 percent in the first stage and 10 percent after three years) will be an incentive for the influx of foreign professionals.
The Minister of Economy justified his idea by the fact that such measures are successfully applied in other countries, such as Austria and the Netherlands: “If more qualified people come to Germany who want to work and take advantage of the benefits, then we will all win,” Habek noted. However, the idea has come under sharp criticism from some parties who claim it favors foreign nationals over German nationals.
“Peace to hard-working Germans”?
The spokeswoman for economic policy of the Christian Democratic Union, Julia Cockner, said that Habek’s proposal amounted to “discrimination against the people of the country.” The general secretary of the union, Martin Huber, also criticized the plan. According to him, “the preferential tax regime is a real scandal.”
The far-right Alternative for Germany party, which has made the fight against immigration a central thesis of its election campaign, called the idea “a slap in the face to hard-working Germans”.
The plan has also drawn criticism from the other side of the political spectrum. According to Susanna Ferschl, a member of parliament from the “Left Party”, it will give skilled foreign workers an advantage over other immigrants in Germany. And the head of the Confederation of German Trade Unions Yasmin Fahimi called the proposal “socially explosive”. According to the Organization for Economic Cooperation and Development (OECD), Germany has already dropped from 12th to 15th place in the list of the most attractive countries for foreigners.
According to the calculations of the German Economic Institute, the lack of qualified personnel in key sectors costs the country 29 billion euros, which is ten times more than in 2010. Minister Habek claims that the plan, which has worked in other countries, deserves to be implemented, even as an experiment, in Germany.
The budget, approved last Friday, almost caused the collapse of the governing coalition: the three parties included in it had to find a compromise between the need to increase public spending and the debt limit established by the constitution. Another controversial aspect of the plan is the cap on European defense and security spending, which looks set to lead to new clashes between Germany and its international partners. The latter in the past accused the country of insufficient contribution to Ukraine.
Germany’s governing coalition of the Social Democratic Party, the Liberal Democratic Party and the Greens is becoming increasingly unpopular. In June’s European elections, it was decisively defeated by the center-right CDU/CSU bloc.