The week in brief, Nov. 26th
A warm welcome to this week’s news roundup. As a reminder, subscribers to my mailing list receive a piece of analysis on Wednesday mornings plus the weekend roundup. If you would like access to all my content, you can sign up for membership. It costs €5/month or €50/year. Try it for free for a month, cancel if it’s not your thing.
The major news of the week is that a compromise deal has been negotiated on the Bürgergeld welfare reform, meaning that it will come into force on January 1st after all.
For any readers who currently rely on welfare payments, there is good news: the level will be raised to a little over €500 a month. But it took a long time to get here. The CDU voted the reform down in the Bundesrat, claiming that it was essentially a form of universal basic income.
Furious negotiations then took place, in which the CDU squeezed concessions out of the government. In the final version, people who lose their jobs will be able to keep €40,000 of savings rather than the initially planned €60,000. Furthermore, these savings will be protected for one year instead of two.
If you would like to read more on why the CDU see the reform as the beginnings of a universal income, I wrote a piece on that last week.
Olaf Scholz called the reform a “milestone” in German social policy that will lead to better guidance, more trust and less bureaucracy.
It should be pointed that Germans are generally entitled to the more generous Arbeitslosengeld I for a year after losing (or leaving) their jobs, which amounts to about 60 per cent of your last salary. The Arbeistamt is very light touch when it comes to counselling people on Arbeitslosengeld I,
Germans might argue about the fairness of their benefits system - but payments that generous plus record low unemployment is a pretty lucky place for any country to be in.
Winter is coming, which means that we need something to panic about. While Germany’s health minister is still in a dither about the next Covid wave, the rest of the country has found a new obsession - winter blackouts.
Where Germans once “hamstered” toilet paper, this time around they’re preparing for Day X by buying up diesel generators. I spoke to the country’s main hardware store, BAUHAUS, this week and they told me that they’d sold out of mini-generators on their online store after demand soared in recent months.
Fears that the lights might go out were stoked at the weekend by none other than the head of the country’s Civil Office for Disaster Protection, who told Die Welt newspaper that “we have to assume that there will be blackouts this winter.” That comment went viral, leading the agency to backpedal on Monday, claiming it had been “misunderstood” and that electricity supplies were in fact secure.
In Tuesday’s newsletter, I looked at what might be behind the agency’s erratic communication strategy. Put simply: should we panic or not?
And, for anyone who hasn’t read it yet, my interview with one of Germany’s leading grid experts, Harold Schwarz, is now available for everyone to listen to. I talked with Dr. Schwarz back in October about the likelihood of a blackout, what such a scenario would mean, and how German energy policy needs to change.
Energy supply is just one issue getting people hot under the collar. Raging inflation is another. Price rises of around 10 per cent are leading trade unions to demand equivalent pay increases for their workers. Economists warn that wage rises could stoke inflation further by putting more strain on production costs.
That’s why a lot of people were getting nervous about the strikes called by IG Metall, Germany’s most powerful union, in recent weeks. IG Metall looks out for the interests of workers in the car and machine-building sectors - basically the engine room of the German economy - and wanted an 8 per cent pay rise.
Employers have largely met their demands, offering a little over 8 per cent over two years. Most economists seem happy that the deal won’t drive up inflation. If you would like to learn more, I looked at whether union-negotiated wages might worsen divides between the east and west.
Enjoy your weekend,