German Handwerk Chief Warns: Ancillary Wage Costs on Track to Hit 44% Without Autumn Intervention
Published on 07/04/2026 at 16:57 | Redaktion boerse-global.de
Jörg Dittrich, president of the Central Association of German Handwerk (ZDH), is pushing for a second reform package in the autumn. His primary target: pulling non-wage labor costs back toward the 40% threshold. Currently these costs stand above 42%, and without corrective action they could climb to nearly 44% by 2028, according to projections.
The main driver is the expected 1.8 percentage-point increase in pension contributions. The pension contribution rate is forecast to reach 19.9% in 2028. Dittrich insists this rise must be offset by cuts in health and long-term care insurance premiums, and he suggests giving insured individuals more personal responsibility. He also calls for tax adjustments favoring owner-managed businesses, arguing that partnerships subject to income tax should not be disadvantaged compared to corporations.
What the July Reform Package Actually Contains
The coalition committee agreed on a 34-point program on 1 July, featuring measures to boost growth and cut red tape. Among the provisions is an extension of fixed-term contracts without cause to up to 48 months, and the abolition of the telephone sick note. On the tax side, the government plans relief worth roughly €10 billion starting in 2027. The written-form requirement will be dropped in certain areas, administrative procedures are to be digitized more aggressively, and a standard “deemed approval” rule will automatically greenlight applications after a set deadline.
Yet business groups are far from satisfied. Manfred Gößl, managing director of the Bavarian Chamber of Industry and Commerce (BIHK), described the reform efforts on 3 July as inadequate. He pointed to the missing tax relief for companies and the lack of greater flexibility in maximum working hours.
Wolfgang Puff of the Bavarian Retail Association (HBE) welcomed the decision not to raise VAT and the planned income tax cuts. But he sharply criticized the failure to cap non-wage labor costs and the refusal to cut the electricity tax for all businesses, not just select industries.
Industry Voices: Praise for Fixed-Term Changes, but More Needed
Bert Sutter of the Baden-based Industrial Companies Association (wvib) applauded the eased rules on fixed-term contracts. However, he also urged faster permitting procedures and permanently affordable energy prices, stressing that one-off improvements are not enough.
Across the border, Austria is holding its own debate on lowering ancillary wage costs. On 3 July the National Council discussed the double budget for 2027 and 2028. The plan includes reducing the contribution to the Family Burden Equalisation Fund (FLAF) from 3.7% to 2.7% — but not until 2028. The Federation of Austrian Industries (IV) warned against introducing wealth or inheritance taxes, with Secretary-General Christoph Neumayer arguing that such levies would drain the equity that family businesses need for investment and jobs.
Data from the Lower Austrian Chamber of Commerce (WKNÖ) from June suggests that every one-percentage-point reduction in non-wage costs could theoretically create up to 12,000 new jobs. In the district of Melk alone, 1,095 vacancies were recently recorded, with the biggest shortages in retail, logistics and construction.
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