The Budget & more – 14th Dec 2023

Hallo from BA! This is the Rorshok Germany Update from the 14th of December twenty twenty-three A quick summary of what's going down in Germany.

This week started with the convention of the Social Democratic Party or SPD. The currently ongoing budgeting debate in the governing coalition dominated the convention. The debt brake is the cause of the current budgeting discussion within the German government. At the convention, SPD chancellor Olaf Scholz didn’t try to gloss over the state of the government coalition but tried to instill confidence in his comrades. Other speakers directed their anger at Christian Lindner, the Minister of Finance, who has repeatedly stated that he is not willing to pause or reform the debt brake.

The government has finally agreed on a budget for twenty twenty-four. The three parties agreed not to pause the debt brake next year but left open the option to do so if the situation in Ukraine undergoes changes. If, for instance, the US stops its funding or there are major developments on the battlefield, the debt brake might be paused again.

Good news is, there will be no cuts in social welfare programs. As a compromise to the market-liberal Free Democratic Party, or FDP, there will be some privatization of public companies, but there are no details about which ones. Instead, the government will cut some climate-harming subsidies. Companies will have to pay the EU plastic tax themselves (previously, the government paid for them), domestic flights will have a kerosine tax, and subsidies for diesel used in farming will be removed.

Due to the ongoing discussions about government spending, the funding of pro-democracy initiatives is now unclear. Several heads of NGOs have come out and said that they don’t know if they will be able to keep working next year. Additionally, a law that was supposed to secure funding for pro-democracy NGOs hasn’t reached parliament yet. The FDP and the conservative Christian Democratic Party, or CDU, oppose the law because they see it as clientele policy.

Despite constant delays, unreliability, and low quality of service, managers of the public train company are set to receive almost 5 Million Euros (or 5.3 Million US Dollars) in bonuses by the end of the year. The bonuses are “leftover” bonuses from twenty twenty-two that weren’t paid out because the company received state aid due to the high energy prices. Companies that received this state aid were not allowed to pay out bonuses to their shareholders and managers. How much each manager receives is calculated on a company's internal performance review based on: Customer satisfaction, trains running on time, women in leadership positions, satisfaction of employees, and financial situation. All managers received exemplary grades in the last three categories, which is why they can now receive bonuses of up to a million euros (or 1.07 Million Dollars).

On Thursday the 7th, the small union for locomotive drivers went on strike for several hours, leading to a standstill of over 80% of long-distance connections. The train company’s management had recently rejected the demands of the union, which led to this preliminary strike. Union members voted in favor of longer and unlimited strikes. So protests are staying in play as a bargaining chip. These may come at the beginning of next year. The union of locomotive drivers is asking for an inflation premium of 3,000 Euros (or 3,230 Dollars), a wage increase of a minimum of 555 Euros (600 Dollars), shorter shifts, among others demands.

The States and unions have reached a collective agreement for monthly wages in the public sector. State employees will receive a raise of eleven percent, with a minimum amount of 200 Euros (or 218 Dollars). This minimum is important because low-income workers will have a salary increase of more than 11%, since they need a bigger raise to reach the 200 euro minimum. Additionally, there will be a tax-free inflation premium of 3,000 Euros (or 3,230 Dollars) for all employees and retirees. The actual raises will gradually come into effect over the next two years. Social workers and educators will get an extra inflation bonus, while people currently doing their apprenticeship will get a raise of 150 Euros (or 160 Dollars) and a job guarantee if they complete their training with the third-best grade.

New investigations show that the richest in Germany are actually wealthier than previously estimated. According to the investigation by The Network For Tax Justice, Germany’s richest have 500 Billion euros (or 540 Billion Dollars) more than previously estimated. The wealth is concentrated among male, west German family business owners. In fact, one family was completely missing from the Manager Magazine list, which includes the German super-rich —it’s an equivalent of the Forbes Billionaires List. The business owners that make up the top five of Germany’s super-rich are all families that have run their businesses for several generations. While conservative politicians are debating cutting social welfare programs and accusing people with low incomes of stealing from the state, Germany’s most affluent are yearly evading taxes amounting to 100 Billion euros (or 108 Billion Dollars), while the damage of welfare fraud is around 270 Million euros (or 290 Million Dollars).

The clubs of the German football league, the Bundesliga, have voted to allow league management to start negotiating with investors. Early next year, there will be a vote on a concrete deal. The deal would get the league 1 Billion Euros (1.07 Billion Dollars) in exchange for 8% of their total advertising revenue over the next twenty years. With the money, the league will make several investments, such as making the league more attractive in foreign countries. Fans and clubs fear detrimental changes to the league, like modifications in the playing schedule or games in foreign countries. The League management has repeatedly tried to alleviate these concerns, but an air of uncertainty and skepticism remains.

The famous perfume influencer Jeremy Fragrance has posed with far-right extremists in the US at a convention of the New York Young Republicans. The world-famous German influencer has in the past received criticism because of chauvinistic comments he made in a speech at an online marketing convention. Now, he took pictures with well-known German far-right extremists and promoted an advertisement agency with close ties to the Identitarian Movement: a pan-European, ethno-nationalist organization that believes in the supremacy of European whites.

Another case of far-right extremism has reached the courts. A trial has begun in Chemnitz against some perpetrators who “hunted” foreigners and political opponents in twenty eighteen.

Five years ago, a German was stabbed to death by immigrants. Although convicted, their guilt is still a matter of debate.

Following the stabbing, neo-nazis from all over Germany came together in Leipzig, showed Hitler salutes, fought and overwhelmed the ill-prepared police and started hunting migrants and political opponents. A few days later, hundreds of thousands of antifascists came together in Leipzig to protest against the fascist riots.

Now five of the perpetrators of these hunts are in court. The court and prosecution say the case was opened late due to the pandemic.

The state of Lower Saxony is planning to create a state-owned apartment building company. If all goes according to plan, the company will secure the funds by the end of the week. With the current available funding the company should be able to build around 1,600 apartments.The conservative opposition criticizes the plan and instead opts for tax breaks for landowners, arguing that this will lead to more apartments being built— an assumption that has long been disproven. Additionally, the state-owned building company will ensure that prices will stay affordable at around six to seven euros and fifty-cents per square meter.

Aaand that's it for this week! So here's to a bit of holiday spirit. We wanted to thank you for listening, learning, thinking, and for joining us on this new thing called Rorshok we're all doing together. Really. Thank you.

Ciao!