Grand coalition 2018: What’s in the new coalition agreement?

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No time to read 177 pages? Here’s a short version of what’s in the coalition agreement

 

More money for education, digitalisation and families: SPD and CDU/CSU have agreed on a new edition of the grand coalition. After marathon negotiations, the new coalition agreement between CDU/CSU and SPD has been signed. It has 13 chapters and 177 pages.

Particularly controversial in the negotiations, which lasted all night, were SPD demands in health and labour market policy. The distribution of ministries was also the subject of a long struggle: The SPD gets the foreign, finance, labour and social ministries, the CDU/CSU the ministry of the interior. Whether there will really be a new edition of the alliance now depends on a vote of the approximately 460,000 SPD members. What was decided in detail:

Europe

The first chapter of the agreement revolves around Europe. The CDU/CSU and SPD declare their willingness to allocate additional funds in order to create a long-term European investment budget that will contribute to economic stabilisation and social convergence. SPD leader Martin Schulz celebrated this as the “end of the austerity dictate”. For example, youth unemployment in Europe is to be combated. In addition, the grand coalition wants to advocate fairer taxation of Internet companies such as Google, Apple, Facebook and Amazon in Europe.

Taxes and finance

The federal government does not want to incur new debt in the coming years. Nevertheless, taxes are to be lowered: From 2021, the solidarity surcharge* will be reduced. As a first step, ten billion euros will be made available for this purpose. 90 percent of all current payers will then no longer have to pay solidarity surcharges. Contrary to initial plans, the coalition agreement does not specify any specific income thresholds above which the surcharge must continue to be paid. Since low-income earners, who pay hardly any taxes, do not benefit from this, they are to be relieved of social security contributions. This was particularly important to the SPD.

The expenditure for all the new projects, which will certainly be implemented, will total 45.95 billion euros.

Health

Health policy was one of the main points of contention until the end. The SPD had campaigned for a citizens’ insurance during the election campaign, but the CDU/CSU rejected it. As an alternative, the SPD wanted to adjust the physicians’ fees for private and public insurance holders. The CDU/CSU also rejected this. Instead, a commission is to be set up to work out proposals for a reform of physicians’ fees. In a new grand coalition, a “modern remuneration system” is to be created that “reflects the care needs of the population and the state of medical progress”, the coalition agreement states.

The scientific commission is to submit its proposals by the end of 2019. In addition, an “immediate programme” was agreed to improve benefits and access to care for those with statutory health insurance. In addition, medical care in rural areas is to be strengthened.

Parity financing will be reintroduced for health insurance. This means that employers and employees will again share the contributions to health insurance; previously there was an additional contribution, which only had to be paid by the employees.

Nursing

An immediate programme is to create 8,000 additional jobs in nursing homes. Salary conditions for nurses are to be improved by making it easier to declare collective bargaining agreements generally binding in future. In addition, the minimum wage for nursing care in East and West will be the same in future. It currently amounts to 10.55 euros in the West. This, too, was particularly important to the SPD.

Pensions

The CDU/CSU and SPD want to stabilise the pension level – i.e. the ratio of the standard pension to the average wage – at 48 percent by 2025. According to current forecasts, however, a decline is not to be expected anyways until later than that. The contribution rate should not rise above 20 percent in the same period.

There should be a basic pension for people with at least 35 contribution years. It should be ten percent above the basic pension. This was an SPD demand.

The CSU was able to assert itself with its demand to further increase the maternal pension: Women who had at least three children before 1992 are to be credited with a third year of education when calculating their pension. So far it was two years. People with reduced earning capacity will be better off when it comes to pensions. The statutory pension insurance will be opened for the self-employed.

Labour market

Until the end, the coalition partners argued about the abolition of unjustified fixed-term contracts. Their duration is now to be limited by law to 18 instead of 24 months. Depending on the size of the company, only a certain number of these fixed-term contracts would be permitted. Employers with more than 75 employees would only be allowed to have up to 2.5 percent of their employees on said contracts.

For companies with more than 45 employees, there is to be a right to fixed-term part-time employment, albeit with restrictions. Employees are to be financially relieved – the contribution to unemployment insurance is to be reduced by 0.3 percentage points. Employees who work in companies with more than 200 employees have the right to return from part-time to full-time work. In companies with between 45 and 200 employees, this only applies to one per 15 employees.

Families

The child benefit is increased by 25 Euro per month, the child allowances are increased accordingly. Both were part of the Union’s election program. The children’s allowance will be increased for particularly poor families. This was a demand of the SPD.

Education

Around eleven billion euros are to be invested in education and research over the next four years. Schools are to receive better digital equipment and full-day care is to be expanded. From 2025, primary school children will have a legal right to full-day care. In order for the federal government to be able to support the federal states financially, the current ban on cooperation will be relaxed.Up to now, the federal government has only been allowed to support schools in financially weak municipalities. However, the federal government will still not be allowed to invest in personnel. Expenditure on research is to rise to 3.5 percent of the gross domestic product by 2025. A Bafög (federal student loan/grant programme) reform with a volume of one billion euros is also planned.

Housing and construction

An additional 1.5 million apartments are to be built over the next four years. This is to be achieved on the one hand by promoting social housing construction and through tax incentives for building real estate. The Union has asserted itself with its demand for supporting families that build or buy houses: Families who buy a property will receive 1,200 euros per child for ten years. However, this should only apply to families with an income of up to 75,000 euros, with a tax-free allowance of 15,000 euros per child. The fact that the subsidy is capped was particularly important to the SPD.

The cap on rent increases, a core project of the SPD, is to be improved. In future, landlords would have to disclose the previous rent price of an apartment so that it could be seen whether the rent increase would not be too high in the case of a new lease. In the case of modernizations, the owner will in future only be allowed to pass on eight instead of eleven percent of the costs to the tenant.

Security

The security authorities are to be strengthened. The CDU/CSU and SPD are planning 15,000 additional jobs (7,500 each in the federal government and 7,500 in the states). The powers of the federal police are to be strengthened. In addition, 6,000 new jobs are to be created in the judiciary. More personnel was particularly important for both parties.

Video surveillance in public places is to be expanded “relatively”. The joint anti-terrorism centre is to be strengthened, as is the Federal Office for the Protection of the Constitution. Overall, the coalition partners want to improve IT structures and the exchange of data between the federal states and throughout Europe.

Furthermore a new kind of legal action for consumers, which was disputed between the coalition partners in the past legislative period, is to be introduced. With it, consumers will be able to check whether they have a legal claim to something in a kind of class action. Contrary to previous plans, the right to bring an action is to be limited to “specified qualified entities”.

Migration

In the future, the number of new refugees coming to Germany each year and their family members will be limited to 220,000. The CSU sees this as the upper limit it had demanded, and the SPD points out that the individual’s right to asylum will not be called into question. Nobody will be rejected because he is the 220,001th. Therefore, it is not an upper limit. Family reunification for those eligible for subsidiary protection, such as refugees from civil wars, is to be limited to a maximum of 1,000 per month. Hardship cases can be taken into account as before, but the SPD was not able to push through its demand for “more far-reaching hardship rules”.

In addition, the CDU/CSU and SPD want to promote the immigration of qualified foreign specialists with an immigration law. This should be oriented to the “needs of our economy, qualification, age, language as well as proof of a concrete job”. For this purpose, existing regulations are to be combined and, where necessary, improved. In districts with high unemployment, state governments are to be allowed to retain the priority check, according to which an equally qualified German applicant has a right of priority over an open job.

Digital

In the future there should be fast Internet everywhere. By 2025, the CDU/CSU and SPD promise a nationwide expansion with gigabit networks. From then on, there will also be a legal right to a fast Internet. This is to be financed by issuing UMTS and 5G licenses. WLAN will be available free of charge in all federal institutions and in trains and stations. The administration is also to be digitised. From 2022 it will be possible to communicate online with all offices.

Energy and climate

The German climate targets for 2020 have not been met by the Union and the SPD. In order to at least meet the targets for 2030, the law will stipulate how much CO2 the various economic sectors will have to save in the coming years. The share of renewable energies is to rise to 65 percent by 2030. The phasing out of coal is to be supported by a 1.5 billion fund to cushion structural change in the affected regions.

Defence and development aid

The CDU/CSU and SPD have agreed to spend more money on both defense and development aid. From 2018 to 2021, additional budgetary leeway is to be used to increase defence and development aid expenditures at a ratio of 1:1. Based on this ration, the SPD’s approval was apparently achieved, as Martin Schulz had always spoken out against increasing the defence budget during the election campaign.

The goal demanded by the CDU/CSU during the election campaign of spending two percent of the gross domestic product on defense by 2024 is not mentioned in the coalition agreement. Despite rising defence spending, Germany is only at 1.2 percent currently. Arms deliveries to states involved in the Yemen war are to be stopped.

* The so-called Solidaritätszuschlag (Soli): A tax originally introduced to finance the reconstruction in East Germany

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