Why Germany needs to reform its social security system | Berlin Briefing Podcast

It's Berlin Briefing time. Germany needs to  reform or needs to say goodbye to its social  

standards. That's the message coming from none  other than German Chancellor Friedrich Merz.  

And with me to talk about whether this coalition  will actually deliver on what it is calling for.  

Is Professor Nicola Fuchs-Schündeln, the president  of the Berlin's Social Sciences Center, who just  

presented her findings to the very coalition of  Chancellor Friedrich Merz. And we have our own  

expert here in the studio, Matthew Moore, who  mingles with the far right AfD party to find  

out what their next move is and also what their  concept, their potential alternative, is here in  

Germany. We're going to have a discussion on what  the political reality is and what the reality of  

this very social system is, and whether Germany  can actually do reform. Professor Fuchs-Schündeln,  

you just had a very interesting conversation,  didn't you? You spoke to members, leading members  

of the coalition and presented to them what the  problem is. And what was your key message there?

Yeah, I was very honored by the invitation to talk  to the leading heads of the coalition and what we,  

what I was asked to talk, talk about was how  we can maintain the support for our democracy  

and our democratic system. And what I stressed in  particular is the connection between the support  

for democracy and the economic situation. And I  would say that from the research that we have done  

in political science and economics, there are two  clear messages emerging. And the one is that while  

the support of democracy, it is very important  that people perceive the state as an active actor,  

that they have a good local infrastructure, that  the schools are working, that the government is  

seen as approachable, as solution oriented,  as client oriented in a sense. And that the  

local infrastructure situation is really key for  support for democracy. And that is an issue for  

Germany because we have neglected investment  in infrastructure for years, if not decades.

But there's also a huge expectation  when it comes to Germany's social  

system and what people can expect to  get out of state in terms of support.

In terms of the social system. I think I would  say that the situation is a bit more complicated  

because on the one hand, we want we really  appreciate as Germans our social system and  

the support that the government gives us. And  that is sometimes something that we clearly  

want to maintain. On the other hand, we see that  we are in a situation where the social system is  

quite expensive and at the same time, we have  a lot of demands on the government budget right  

now coming from increased defense spending, coming  from the demographic transition. So there are many  

issues. So that I would say there is  a clear need for reform of the social  

system and of the basic security system.  What I would advise the government there  

is to focus less on the actual payments to the  recipients, but more on how can we have a social  

security or a social basic security system that  still keeps incentives for the individuals to  

work? Because this is where I think a lot of  dissatisfaction comes from that low income  

earners. They say I am working 40 hours a week,  and my net payments are not much more than what  

someone gets with some basic security. And  here, I think, is a clear need for reform.

Let's just take a listen to the ambition  Friedrich Merz formulated just a short  

while ago on what he wants to achieve with this  coalition in terms of Germany's social economy.

“We agree that we want to preserve the welfare  state of the Federal Republic of Germany. We  

do not want to dismantle it. We do not want to  abolish it. We do not want to cut back on it,  

but rather preserve its most important  functions. And that means we have to reform it.”

So Matt, there's a will for reform. This is  also something that Friedrich Merz campaigned  

on. But he's in a coalition with the Social  Democrat Party. So where are the differences  

when it comes to this very key ambition  that we just heard from Friedrich Merz?

I think we'll find out over the next few months  because we've heard, Friedrich Merz, it's been  

a lot of talk in Germany about the autumn of  reform. “Herbst” of reform here, but not a lot  

of content. And so the big fight at the moment is  to is to go back to. What we just heard about was,  

is this idea of how do you make the cuts  that are necessary to the German budget,  

which meant Germany spending too much.  Every year the deficit is between 25  

and 30 billion. So there's a there's  an acknowledgement we can cut money.  

We need to cut money. But it's about where  it is. And now there's been a huge kind of  

public debate about how you cut what we  just heard about this citizen's income.

“Bürgergeld”…

“Bürgergeld” in Germany, citizen's income, which  is this Social security, basic security there for  

people who are unemployed and in-work low earners.  And the feeling is okay, “we're spending too much  

on this, but how can we cut it?” And you've got  the Social Democrats saying they're concerned  

that these cuts will be too extreme, that they  will hurt the vulnerable in this country. And on  

the other hand, you've got the conservatives who  are saying the state needs to be leaner. We need  

to encourage people to get back out to work.  We need to incentivize we need to make work,  

pay more to make people want to get out of there.  To get out of their unemployment. And get up and  

go out to work again. Because unemployment in  Germany is at 6.3%. It's huge. So there's a  

realization, there's an acknowledgement something  needs to be done. But now we're seeing this kind  

of the devil is in the detail. And so although  we've talked about “Herbst” of the reform,  

this autumn of the reform, there's still, we  still got to have a debate about what exactly  

the measures will be to encourage people to  get back to work and make those necessary cuts.

Yeah. It's really interesting how the debate  here is zooming in on this “Bürgergeld”. Get  

it's not a basic income, but it's means tested.  But still many people perceive it to be like that.  

And a lot of Ukrainians who weren't treated  like refugees, they were instantly integrated  

into the system here in Germany are also within  that system. But, Professor Fuchs-Schündeln,  

why do you think we're seeing this focus on a  social provision that really is only a fraction  

of the German system. Just to illustrate, the  pension system is so underfunded that almost a  

quarter of the national budget is being used  not to fund the entire system, but just as  

a surplus to keep it afloat. So why do you think  politicians are now zooming in on the provision of  

“Bürgergeld”, where they want to save as much as  5 billion, which really isn't that terribly much?

I think you are exactly right in terms of  the overall government budget, the budget,  

the citizen's income is very small, so reforming  it won't help the basic budget problem that  

Germany faces. It is still a politically very  charged, part of the government budget first,  

because as we already discussed, there is this  question “do we give enough incentives to work  

for individuals?” And that is, on the one hand,  a fairness question. But on the other hand, it's  

also really an economic question because while  right now we see a little bit of an uptick in the  

unemployment rate in the medium term over the next  decade. Yeah, over the next decade, we face a huge  

demographic transition. So the baby boomers will  go into retirement, and the number of people in  

the typical working ages will decrease by 10% over  the next decade, according to a UN projection. So  

we really need people to work. And so we need to  give incentives to work also. So for individuals  

who are currently on the citizens income. And what  I also want to stress is a lot of the discussion  

is about how much money do these individuals  receive. But I think what should be discussed much  

more is also there could be a lot of government  saving by making the system easier and more  

efficient. So right now it's a very complicated  system. So it's some really some lump sum that  

these individuals get. But then it also they get  support for their rent and they get support for  

their children. And all of that is also handled  by different institutions of the state. So, that  

makes it very inefficient and very costly for the  government. It also makes it not very accessible  

for the people who are really in need, because you  have to deal with different government agencies.  

You have to give a lot of very complicated  information on your personal situation. So,  

I think from that perspective, we also should  reform the system to make it more efficient, which  

makes it cheaper for the government and makes it  more accessible for the individuals who need it.

Can you just tell us how challenging  the demographic factor here is?

The demographic factor is very important for two  reasons. So we have the baby boomer generation,  

which is just entering retirement now and then  the younger generations who come into the labor  

market, they are significantly smaller. So we are  already in the last years noticed that there's  

labor shortage. It started in certain professions,  like for nurses and in older individuals care and  

so on. But now you see it really broadly.  So you see it for restaurants for a lot of  

especially service sectors, that there is a  labor shortage and that will increase in the  

future. So we really need to give incentives to  work also for low income individuals. That is the  

one part of it. The other part of it is that the  demographic transition for certain is a challenge  

for the social security system, for the pension  system. You already mentioned it already. Now,  

it's not a self-funded system. There's a  lot of tax payment also going into it. And  

over the next 10, 15 years, this situation  will certainly get worse. So there's also  

a need to really think about how can we  make the pension system more sustainable.

Now, Friedrich Merz in his coalition, they've  promised and it's very interesting because  

it's always Friedrich Merz's talking about this  autumn of reform, and then you speak to people  

from the Social Democrats as coalition partners  who say, well, that term wasn't from us. So,  

they also stressed that after the autumn,  there comes winter, then comes spring,  

then comes summer, and then comes another autumn.  So there seems to be a much longer timeline here.  

But we did hear Friedrich Merz's promise also to  the younger generation that they won't be left  

alone with paying for this problem. Let's just  take a listen to what he said in Parliament.

“This reform of our welfare state is imminent.  We have promised to tackle this reform with  

determination and we will keep that promise.  I want to say this especially to the younger  

generation in our country. Young people in  our country should not be burdened further  

just because they are in the minority. At the same  time, the older generation must be able to enjoy  

the retirement they deserve in financial security  for the work they've done throughout their lives.”

Matt, let's face it, the Social Democrats and the  

Christian Democrats led by Friedrich Merz.  They are both appealing more to older voters,  

aren't they? So it's interesting that he  singles out younger people as a minority.

It made me wonder when I listened to that,  it made me wonder, so what is he planning to  

do then? How is he going to make that  promise to younger voters, to younger  

people in Germany? How is he going to make life  easier? Because there is, he's acknowledged this,  

this generational inequality. Some in his  own party have acknowledged it and have  

called for a kind of a boomer tax, which  is a kind of controversial in a way, but  

I don't think he's necessarily going to embrace  that tax if he's at the same time saying people  

in retirement need to enjoy the retirement. So if  he starts talking about saying taxing the boomers,  

then he's going to have a problem. As you see,  this is you know, the dilemma is because this  

is a core voting group. Older, older voters  are consistent voters. They are voters that  

in this country typically vote for the  center right and the center left parties.  

But that's what I'm interested to see. How can  he make good on that promise to young voters?

Well, for now, the coalition is set up a host  of commissions. There's also the key one is,  

of course, pension reform bill. So when you're  talking demographics, and I just want to play  

a soundbite by Bärbel Bas, who's the  minister for social affairs in Germany,  

by far the largest budget in the German within  the German federal budget. And she's the one  

who needs to be convinced that there is meaningful  reform. And I think it's always really interesting  

that we also hear from Lars Klingbeil by  the co-leader of the Social Democrats,  

and who then stresses that, yes, there's a will  there. There's a need for reform. We also heard  

from the German president, Frank-Walter  Steinmeier, who is above politics now,  

but he is a social democrat also calling for  that reform that is urgently needed. Then we  

hear Bärbel Bas, responding to Friedrich Merz's  very bold claims of making significant cuts to  

the German social system. With this, and there  are some expletives which we are bleeping out.

“This debate, that we can no longer  afford our social insurance systems  

and our welfare state is, and I  apologize for the language, Bull…”

So, Professor Fuchs-Schündeln, is that assessment,  

although nobody here would of course ever  use that kind of term. Is that correct?

I think there is a clear need for reform, both for  the for the welfare state and but even more so for  

the pension system. And that is something that has  to be recognized. And I don't think it goes away.  

By the problem goes away by claiming it doesn't  exist. And I think most and you mentioned this,  

the Social Democrats also see this. It's a huge  political economy problem. And Mr. Moore was also  

alluding to that. The majority of the vote, as  they get older and older, so that they are in the  

retirement age, are close to the retirement age.  So obviously they have an interest in maintaining  

the system. But on the other hand, we know it's  not sustainable. So we need to do something. And  

I think in part of the political world as is  arrived, but in other parts not. And we saw now  

in the negotiations for the coalition agreement,  especially when it came to the pension system,  

it was a lot of business as usual. So every party  got its pet project. So for the for the Christian  

Socialists, that is that we give pensions to  mothers just for giving birth for the Social  

Democrats is that we don't adjust the pension  payments according to a demographic factor. And  

then the solution that they came up with is to  say, we will have a commission that discusses  

this. But I think there were commissions on  the working on the pension system before, and  

the problem is well known and understood.  So it's not really that we need a lot of  

expertise. We need political will to go  to the problem. And there I think what  

the Chancellor stresses, it's true that, I mean,  the different generations have to do their part,  

but one obvious big possible part of the  solution would be to increase the pension age,  

at least adjusted to increases in longevity. And  Germany did it successfully in the past. I think  

it could be done as well, but it seems still that  politicians are not willing to touch this issue.

Yeah, it's a very touchy subject. At  the moment everybody born in from the  

late 60s onwards, it goes into pensionable  age at 67. There's a process towards that,  

and there's now a debate whether to change that  formula to whether to peg it to life expectancy.  

The interesting thing, of course, is that we've  already seen another government fail over this,  

and that is in neighboring France, haven't we,  where Emmanuel Macron tried to implement a deep  

reform and then really had people on the streets.  And in fact, as we're as we're recording this,  

there are people on the streets in France  again, demonstrating in not as large numbers  

as previously, but this is a huge problem for  democracy. Professor. So I would like to throw  

that back to you. How delicate is this when  it comes to the stability of German democracy?

I think, we shouldn't really compare Germany to  France. The problems are similar. So, that is  

true, though the French pension system is even in  more dire need of reform, because it is still more  

generous than the German one. On the other hand,  the political situation is a little bit different.  

The French always have more of a knack to go on  strike than the Germans have. There is also more  

debate about the Allied political leadership.  Then then we have in Germany, fortunately. So I  

think that compared to the French ones, the German  politicians have a little bit of an advantage in  

implementing reform. But we, they, they do have  to communicate this very clearly. And I think  

the communication is the right one that we say. I  mean, all the generations have to contribute, but  

that also means that, for example, our generation  or my generation, as our longevity increases,  

we could say, well, part of that increase goes  into an increased retirement time, but part of it  

also goes into increased working time. I do think  this could be done and could be communicated,  

but the politicians have to be more courageous  also in communicating that. And the other thing  

when it comes to maintaining our democracy,  while really tackling all these reforms that  

are necessary in Germany is that it would really  help to have economic growth again. So we are  

in the third year without any positive economic  growth in Germany. And this is certainly a problem  

for government finances. So it makes it harder to  finance investment in infrastructure that we need  

the investment in defense and also to finance  the pension system. It also gives individuals  

this feeling that nothing is really moving.  And we know again from research that especially  

low income earners, if there is positive economic  growth, it still supports a political system and  

democracy because they understand that they can  also take advantage of that in the future and  

that their that situation can improve. But if  the entire economic situation is perceived as  

being very stagnant and without any hope and any  vision for the future, then that also translates  

into a lot of doubt about the political system  and about democracy. So I think one thing,  

apart from thinking about the social security  system, the pension system that this government  

should focus much more on and doesn't do enough  of yet, I would say, is to think about how can  

we stimulate economic growth. And a big part of  that would also be about how can we deregulate,  

how can we improve our bureaucracy so that firms  have more incentives to really invest? And how can  

we also think about what are fields and sectors  that can be the leading sectors in Germany in the  

future? In addition to thinking about how can we  protect the sectors that have been important in  

the past, but that are now under problems from  external competition like the car industry.

Yes, there is a lot to take in for voters,  people on the streets here in Germany. We  

did see the German chancellor come out  with business leaders and pronounced  

that there would be some 600 billion investments  happening. But when you looked at the details,  

not much of that was new then. The economic  figures. They are disappointing because there is  

no real growth in Germany, despite the fact that  Merz had raised so many expectations. Germany is  

taking on record debt. It's breaking with its  debt brake. So 500 billion in infrastructure  

investment. The sky is the limit for defense  spending. And at the same time you have the  

German chancellor telling the German people that  they work more. He literally should work more.  

And that was one of his key messages. And also  that despite the fact that Germany is taking  

on so much debt, that the budget will need  to be slimmed down, that savings will need  

to be made within that arena. Will the SPD, the  Social Democrats help him push through reform.

I think, I mean, there's, I think inevitably  the commissions that you mentioned will come  

up with some proposals and they will reach an  agreement. I mean, the problem that I think  

that's worth just underlining for people outside  Germany, I guess, is, we heard from the work,  

Bärbel Bas, the minister, they're talking  about it being this, this debate being bull…,  

and she's talking to her base. And so you've  got the SPD, Social Democrats, on the one hand,  

talking to their base about the conservatives.  They just want to cut the welfare state down so  

that it's that it's basically nothing. And then  you've got the conservatives are the same thing  

promising their voters and also the conservatives  facing a threat from the AfD on the far right. And  

looking for ways to promise their voters we are  going to slim down the state. We are going to get  

people back out to work. We're going to make we're  going to promote that growth that is necessary to  

get the economy running again. And so I think  there will be. They'll come up with a bunch of  

measures. The question is, will they be enough?  Will they be enough to tackle this problem? I  

mean, we've talked about citizens income, but  the pension, the dramatic situation facing this  

country cannot be underestimated in terms of, as  you said, one in every €4 of outgoings spent on  

just subsidizing basically topping up this  pay as you go pension system. We have this  

demographic crisis. And what's interesting, you  know, you asked me about the Social Democrats,  

but obviously I focus on the AfD. And so  I was at the AfD this week. And you know,  

they're saying, well, we would we would basically  it's kind of a like a neo liberal approach to the,  

to the fiscal finances of the country. So it's  like cutting tax, cutting spending being much  

leaner and that would promote growth. But one of  the things that they that they promised voters  

when it comes to pension, just because I think  this is super interesting, right. So that at  

the moment the net, the pension level, the Social  Democrats, you know this, right? They said 48%. So  

48% of your final net income is the level, the  minimum level of your pension when you retire.

The average income.

48%. Do you know what the AfD is promising  voters? 70. The AfD is promising voters 70%,  

which by some estimates would be another €130  billion more. But because the AfD is not in power,  

it doesn't ever have to explain how it  would finance that. It's just that it's  

super interesting. But on the other hand,  they're also saying we would cut citizens  

income, we would cut development, military  spending, we'd cut weapons to Ukraine. And  

those are the things that everyone  talks about or hears in the news,  

but they don't hear about how they're going to  spend, how they're going to keep that promise  

of spending something like almost €260 billion a  year, just topping up pensions in this country.

It's interesting because there was the first  session of the parliament after the summer break,  

and we both actually went to the  press conference of Alice Weidel,  

the co-leader of the far right AfD party,  which is the largest opposition party  

here in Germany. And of course, always  the go to voice to hear what you know,  

what the biggest opposition has to say.  And there was a journalist who put to  

Alice Weidel. So “what is your suggestion for  social reform?” Let's just take a listen to that.

“Yeah, I believe that welfare payments are  the main issue. They're the main part. And  

the financing of the welfare is already  running a deficit of almost 55 billion.  

If you extrapolate that and our program  clearly states that you are not allowed  

to pay cash benefits to foreign citizens,  especially not to illegal asylum seekers.  

And that alone represents a potential saving  if you significantly reduce social benefits,  

which, incidentally, also include health  insurance benefits, and finally deport  

people who do not have a residence  permit here to their home countries.”

I just want to do a quick fact check  on that as well, because there are no  

illegal immigrants who receive this particular  benefit. Also, professor Fuchs-Schündeln,  

I would like to throw that comment to you  because I couldn't find the 55 billion  

deficit anywhere. So I'm not sure whether  you agree with that assessment, but it was,  

of course, very interesting how the opposition  as well is zooming in on this very one payment,  

the citizens payment that really is not the  key issue about social reform, though, is it?

Yes. I mean, it's a totally different order of  magnitude in terms of the financial size and the  

than the pension system. So it certainly won't  help. But what is very interesting listening to  

Alice Weidel’s remark, is how the AfD always  deflects any issue that comes up back to the  

migrant issue. So that is really the main rhetoric  that they that they are pushing along. And it's a  

rhetoric that populist parties always use in all  countries worldwide and also in the past. And  

that is apparently very easy to transmit to the,  to the electorate. But it's certainly in economic  

terms, if you look at their program. Mr. Moore was  pointing this out. This is clearly not a thought  

through, but I think we have to realize that many  voters of the AfD, they or the most voters, they  

don't elect them because they are so convinced by  their economic program. They elect them more out  

of frustration with the existing parties and this  feeling that that nothing works and nothing moves.  

And that's also why I think this autumn of reform,  it certainly we cannot solve all the problems in,  

in one autumn. And that is really unrealistic.  But it is important that, that the government,  

the coalition government, gives this push of  reform, that people perceive something is moving  

and something is done. And here I hope that both  of them, can really kind of take their heart and  

be more courageous to implement these reforms.  And you were, you were pointing out that it's  

the electorate of the Social Democrats, that maybe  don't want this reform, but I just want to point  

out that the Christian Democrats have the same  hesitation. So, Chancellor Merz is saying that  

the Germans should work more. And it is true  because we have this demographic transition  

that we need a more people participating, more  in the labor market. But then if you look at the  

data, the group that is really not working much in  Germany are married women. And part of the issue  

is a tax system where we have joint taxation of  married couples. And so the marginal tax rates of  

secondary income earners are relatively high. So  one could really reform that system and gives more  

incentive to work also for, for married women, so  many mothers in Germany they do work but they work  

very low hours. So by international comparison, in  Europe only Italian women work less hours than the  

German women. So there's a huge scope to increase  that. But we would need this tax reform. And here  

it's the electorate of the Christian Democrats  that is really against this. And also here I  

would say if Chancellor Merz takes this seriously,  he should push for more reforms in this direction.

Yeah, it's really interesting because I also  read that figures that this could save up to  

€20 billion if you reform the tax system,  which to no longer reward high the highest  

income in a marriage within a marriage. And at  the same time that we saw the CDU agreed to a  

call by its Bavarian sister party, the CSU, to  implement something called the “Mütterrente”,  

a pension, special pension for mothers who didn't  go to work and were therefore dependent on the  

pension of their husbands in later life. And this  costs some €10 billion. So, this is really mixed  

messaging from a coalition that is now called  on all of its ministers to shave off a bit more  

and save some money, because they already have a  deficit in the next budget of some €30 billion.

Hmm. Yeah, that was one of the things, actually,  that the in the debate yesterday that the Greens  

criticized was this kind of I guess it would  be pork barrel politics, right? Just spin.

That's nothing new. That's  an international thing. Yes.

It's like just giving kind of finding money. When  to keep people happy. But I think what, what we  

just heard there is super interesting about little  changes that you can make that can also do like do  

a number of things kind of promote this, this  idea that people get back to work because and  

I think that's where like the autumn reforms, that  those are the kind of changes that we'll see. And  

as you say, there will be a big debate within the  conservatives because it's, you know, people have  

their own objections. It's in a sense there's  these ideological debates within the parties,  

and that's what makes it so challenging, I think,  for Germany to pull off reform when you have these  

kind of multi-party coalitions. But, you know, I  think it takes it takes people who are willing to  

make enemies within their own parties to push  that through. I mean, we saw in the past you  

had the Gerhard Schröder who made enemies  in his own party. With his reforms of the of  

the “Hartz 4” reforms 20 years ago. And, you know,  I was listening to that speech in the Bundestag  

and he talked about just that. You know, you need  to people who don't get up and go out to work are  

going to be going to have to calculate the fact  that they will be sanctioned and they will lose  

their benefits. And it was applauded by the  Bundestag. And I just thought, I wonder whether  

a Social Democrat leader in the Bundestag  and the parliament today would be able  

to say that and get the same kind of  response. And yet, people years later  

said that those reforms were really pivotal  to Germany's, to Germany's economic growth.

Even Angela Merkel actually said that she was  reaping the rewards for that reform. But it's  

still a trauma within the Social Democrat Party,  which feels many large parts of the party still  

feel that their own chancellor handed over large  chunks of the social security that they fought  

for decades. So that's a trauma that Social  Democrats still have to deal with until today,  

I just want to conclude that by asking for your  prediction on whether this autumn, how much  

autumn of reforms do you expect us to see? And  do you think it's this autumn or which autumn?

I don't think. I don't think it'll be this autumn.  I think that's clear. I suspect that we will.  

We'll be talking about this well into next year.  But I think it's important that that the changes  

that they make, they make them as quickly as  possible. Because I don't think that there's  

a lot of time. And we talked about the AfD. We  talked about the need for economic growth again in  

Germany and how important that is just to the mood  in the country. And I think if Friedrich Merz and  

this current government are going to maybe stay as  the number one party by 2029, the next elections,  

and to fend off this, this kind of the threat  from the AfD, they really need to promote economic  

growth. That's one of the most important things.  And part of that is making these, these changes  

to the labor market and also dealing with this  kind of big giant pension elephant in the room.

The pensions certainly are the big one. Professor  Fuchs-Schündeln and you said that comparing  

Germany and France won't get us very far. But I  do want to have one more comparison because the  

French one says say, never of reform, but  always of revolution. I wonder after the  

conversations certainly, that I've had, it feels  like this autumn of reform has been called off,  

that it will focus on foreign nationals,  potential social payments being cut towards  

foreign nationals and including Ukrainians  that there won't be any huge reform. But do  

you have the impression that this coalition  has the guts to, whether it's this year,  

next year or the year after, to essentially  launch what would be a reform, which is to  

finally. Finally, finally, after two decades  of talk, tackle the big elephant in the room,  

which is the German pension system,  and actually changed the formula.

I hope, and I do think that they perceive, what  Mr. Moore stressed that they need to reform in  

order to avoid that the AfD gains even further  votes. So it's really important that they have  

that they are perceived as acting and as acting  together. It's hard to get into this mode, which  

is usually combating or. Yeah, kind of seeing the  other party as a, as a real political enemy. But  

here I think the political enemy is really on the  extremes and they have to collaborate much more.  

And I would also say what is really important  is that we get economic started. And for that  

I wouldn't say the pension system is the most  important one. It's a very important issue for  

the government budget. But what we need to get  growth is also deregulation. So really making  

it easier for firms to invest. We need to give  firms incentives not to invest. Also in modern  

technologies we need a new vision of where Germany  is going. What are the leading industries. It  

cannot be steel and car anymore, but what is it?  And here I think the government also takes a very  

important role. So whether they will manage to do  that, and I can only hope, but certainly it is an  

urgent and pressing issue and one can compare  again to Chancellor Schröder in the “Hartz 4”  

reform that happened when the unemployment rate  really skyrocketed in Germany. And then the  

pressure became so hard, so large to reform. And  nowadays, I mean, we are in the third year without  

economic growth. And now the unemployment rate  also goes up despite the demographic transition.  

So the pressure is building up and I hope that  it will translate into courageous actions.

Professor Fuchs-Schündeln, thank you very much  for your analysis on that. And I do already feel  

a Berlin Briefing on the economy coming on here  very soon. I am so thanks to you. Thanks to Matt  

Moore here in the studio. Also want to say a  big thanks from Nina Haase and my colleague,  

who got plenty of birthday wishes from everybody  because she appeared on her birthday in the  

last episode below. We're going to drop more  facts and figures for you to look deeper into  

this. We will keep you posted on whether this  autumn of reform actually happened. Of course,  

that will also take place in our Berlin  Briefing newsletter that comes out every  

week. There you can also find the latest  analysis and the latest figures. So the big  

question on whether this coalition will break  through the almost nostalgia that there is on  

how the social system works. That's still an  open one and we'll keep you posted on that.