German ‘traffic light’ government makes workers’ pay for financial gaps

Demonstration of farmers in North Rhine-Westphalia, December 2023 (photo: CC)

After the judgement of the German Federal Constitutional Court plunged the ‘traffic light’ government into another deep crisis, the heads of government have agreed on a draft budget for 2024. The draft is intended to plug the 17-billion-euro hole in the budget that would be missing next year because of the judgement. However, the decision does not mean a respite for the government. Soon after the decision was announced, there was a lot of criticism, including from within the government itself.

In contrast, the DGB (German Trade Union Congress) leadership praised the decision. This is a slap in the face for the millions of trade union members because the government’s plans are an attack on the working class and the middle classes, who are supposed to pay for the missing billions. The farmers have reacted correctly with protests. The trade union leaders should take this as an example and finally call for mass protests the government’s policies.

Following the decision by the coalition leaders – chancellor Scholz and the ministers Habeck and Lindner – the individual ministries were presented with a sum “for information” that they must cut in their respective departments. In addition, there were several concrete measures that the government leadership had already formulated. In total, this amounts to seventeen billion euros, which is to be recovered through a variety of measures.

Price increases are attacks on the working class.

Regarding the planned cuts, Scholz, Habeck and Lindner boast that they are complying with the debt brake without cutting social spending. Instead, “environmentally harmful subsidies are to be eliminated” and cuts made in other areas.

If you take a closer look at the decision, you will discover that these measures all mean that the missing billions are to come from the pockets of the working and middle classes. This is because the increase in the CO2 tax to forty-five cents per tonne, the introduction of the plastic tax (which was previously paid by the federal government to the EU), as well as the increase in VAT in cases where it had previously been reduced, will further increase prices for consumers.

According to a calculation by the magazine Capital, a typical family of four will incur additional costs of 211 euros due to the abolition of the gas price brake and the increase in the CO2 price; around one hundred euros due to the increase in grid fees and the abolition of the electricity price brake; around 4.3 cents per litre will be added to petrol prices; and food in restaurants will also become more expensive, as VAT for restaurants will rise again from seven to nineteen percent. At the same time, the government is holding out the prospect of an industrial electricity price to secure corporate profits.

So instead of directly applying the hammer of cuts, the masses of the population are asked to plug the budget gap in a roundabout way. Meanwhile, large companies are spared and even continue to receive generous subsidies, even though many have made record profits in recent years. In the summer, for example, the OECD reported that German companies had increased their so-called unit profit by 24 per cent since 2019.

Although the government states that taxes on income will be reduced to compensate for rising costs, for example by increasing the basic tax-free allowance, this will firstly only mean little relief for those on the lowest wages and, secondly, will not compensate for the price increases and increased burdens, let alone solve the problem that the state has too little money to make urgent investments in schools, healthcare, etc.

Not all the planned cuts have already been specified. For example, two hundred million is to be cut in the Ministry of Education and 380 million in the Ministry of Transport. Other ministries are also facing severe cuts, although it is not yet known exactly what is to be cut.

However, individual plans are already known. For example, a further 600 million is to be cut from the federal subsidy for the pension funds, which is used to finance the basic pension. Together with previous cuts from last year, the cuts to the pension subsidy total five billion euros. These measures will reduce the reserves in the pension fund. In short, with the current cuts, contribution increases or more general attacks, such as raising the retirement age, will now be on the cards sooner.

Agricultural cuts and farmers’ protests

So far, it is the cuts in the agricultural sector which have met with the strongest resistance. The abolition of the vehicle tax exemption for forestry and agricultural vehicles (the reason for this is quite simply that these vehicles are primarily used on farmers’ fields and do not contribute to wear and tear on public roads) was intended to save almost one billion euros according to the federal government or, to put it another way, to be recovered from farmers through a tax increase.

Following the first waves of protests from farmers, the government has now partially reversed these measures. The motor vehicle tax is not to be increased and the subsidisation of diesel is to be phased out. Nevertheless, the farmers’ association intends to hold on to its planned protests on 8 and 15 January until all agricultural cuts are reversed. That is the right thing to do. The trade unions and the left should support these protests and at the same time promote left-wing and anti-capitalist positions and articulate the interests of those employed in agriculture.

The farmers’ association, which claims to represent ninety percent of all farms in Germany, is a powerful lobby organisation that primarily represents the interests of large agricultural enterprises. At the same time, there are also many family farms in Germany that have no employees or even only run their farm as a secondary source of income. It is precisely these farms that will suffer massively from the tax increases, jeopardising their continued existence.

Right-wing forces such as the Alternative for Germany (AfD) and the far-right Free Saxons and Identitarians are trying to gain political influence by supporting the farmers’ protests. Bourgeois media and politicians are seizing on this to discredit the protests and undermine support among the wider population. Right-wing symbols have been seen on some tractors during demonstrations. The farmers’ association is close to the conservative CDU/CSU. However, conservative, right-wing populist and other pro-capitalist forces will not represent the interests of small farmers and agricultural workers. The fight for their interests must be linked to the fight against the banks and the large retail chains that dictate prices. That is why the trade unions, and the Left Party, must support the demands of the farmers and call for a joint struggle for a programme against any cuts, for higher wages and better working conditions, for tax increases for the rich and banks and corporations.

The railway staff organised in the GDL (train drivers’ trade union), retail workers and local public transport workers are in collective bargaining. The GDL should not allow the inadequate offers made by the railway board to deter them from their plan of a five-day strike next week. It would also make sense to organise a joint day of strikes and action together with the farmers, as well as a large demonstration against the government’s policies, to which all workers, socially disadvantaged people and small self-employed workers are called.

According to a Spiegel survey in December, around seventy per cent support the farmers’ demands. This support primarily expresses broad dissatisfaction with the “traffic light” government and support for those who oppose it. This shows the potential for broad resistance to the government’s policies.

Wavering traffic light = new elections?

Parallel to the budget crisis, support for the federal government is at an all-time low. According to the latest Deutschlandtrend poll, just 17 per cent of Germans eligible to vote are satisfied or very satisfied with the government. If migrants, some of whom have lived in Germany for years but do not have the right to vote, were included, this figure would certainly be even lower, partly due to the German government’s attitude towards the war in Gaza.

Whether this situation will lead to new elections in the summer, as the conservative leaders Merz and Söder are calling for, remains uncertain. Employers’ organisations have recently opposed the demand, partly because there is currently no more stable alternative. From the perspective of the working class, new elections would not solve the problems either, because there is currently no alternative government in the interests of the mass of the working population. This must first be created by building a mass socialist party of the working class, which would also consider the needs of the middle classes in its programme.

Nevertheless, nothing can be ruled out now. It is unclear how the situation will develop in the new year. Major protests over government policy, disastrous election results in the European and local elections in June or even an attempt by the liberal FDP to abandon the sinking ship, could trigger new elections.

Resistance instead of backing the government!

Unfortunately, the DGB leadership’s initial reaction to the draft budget was exactly the opposite of what was needed. Under the headline: “Federal budget: DGB welcomes agreement”, Chairwoman Yasmin Fahimi declared: “The DGB welcomes the fact that the federal government has now quickly reached an agreement and is thus sending a signal of stability and reliability.” And instead of saying a word about the consequences for the situation of ordinary workers in Germany, Fahimi even emphasised: “But now we must continue to work on how to solve the problem of excessively high energy costs for German industry.” This stance must be contradicted! The trade unions must oppose the draft budget and the associated propaganda wave. Because now we are supposed to pay for the capitalists’ crisis instead of any dent being made into the profits of the big corporations and banks.

Such a campaign would also be important to counter the divisive propaganda. In particular, the labour minister Hubertus Heil’s proposal to reduce the payments to recipients of citizen’s income (basic social benefit) for up to two months, including for rent, if they turn down job offers is aimed at pitting employed and unemployed people against each other.

This makes it more important to increase the pressure on trade union leaders in the new year to start resistance to the government’s plans. Sol – Socialist Organization Solidarity (CWI Germany) will continue to participate in all initiatives in which workers unite to fend off the attack


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January 2024