Germany's New Labour Reforms Risk Worsening Birth Rate Decline, Experts Warn
Published on 07/05/2026 at 03:32 | Redaktion boerse-global.de
Germany’s birth rate slumped to 1.32 children per woman in 2025 – the lowest figure since 1997 – and the Ifo Institute now warns that a centrepiece of the coalition’s planned labour overhaul could push it lower still. Under a 34-point package presented in early July by the CDU, CSU and SPD, employers would be allowed to offer fixed-term contracts without a specific reason for up to 48 months, with as many as six renewals. The rule would apply to anyone hired before the end of 2030.
According to Ifo researchers, women in temporary positions frequently postpone having children. Only 44.1 per cent of affected women consider their professional situation compatible with starting a family. The coalition’s proposal, designed to give companies more hiring flexibility, has drawn sharp criticism from family-policy advocates and unions alike.
Alongside the fixed-term expansion, the government is moving to tighten sick-leave rules. The current practice of obtaining a sick note by phone is to be abolished, replaced by a requirement to see a doctor from the first day of illness. A retroactive certificate covering up to three days would remain possible. Vice-Chancellor Klingbeil and Labour Minister Bas have expressed scepticism, while other senior coalition figures, including Friedrich Merz, insist on the in-person certificate. DIW economist Daniel Graeber cautions that obliging workers to visit a surgery on day one could increase infections in waiting rooms. Public opinion is firmly against the change: a YouGov poll found 59 per cent of respondents reject the new attestation duty.
High earners will see their dismissal protection reduced from January 2027. Employees with a monthly salary of around €15,000 or more could see their job terminated by court order against payment of severance, at the employer’s request. The coalition also plans to loosen the small-business clause: the threshold for standard dismissal protection may be raised from more than ten employees to fewer than 50, meaning many more small firms would be exempt from the full rules.
On the tax side, the flat-rate levy on minijobs is set to rise from two to five per cent. At the same time, the tax-free allowance for Sunday and public-holiday bonuses would be lifted to an hourly wage of €75.
Maternity protection is also being reshaped. Once an employee notifies her employer of a pregnancy, a workplace risk assessment must be conducted. If no position compatible with the protection requirements can be offered, the employer faces a statutory employment ban. The Virchowbund medical association stressed in early July that the same obligation applies during the breastfeeding period, and that the employee must continue to receive full pay while away from work.
When maternity protection requires a workplace risk assessment, many employers discover gaps in their safety documentation. A free Risk Assessment Toolkit provides 41 ready-to-use templates and checklists to help you document hazards in compliance with current regulations. Download the free Risk Assessment Toolkit
The coalition has set a deadline of mid-October 2026 to finalise the implementation of co-determination rights regarding the introduction of artificial intelligence in the workplace. Many details, including how the new rules will apply to existing contracts, remain unresolved.
Disclaimer regarding our articles: No investment advice, no buy or sell recommendation. Information on prices, companies, and markets is provided without guarantee; changes are possible at any time. Stock market transactions can lead to substantial losses. Our articles are created and reviewed in whole or in part automatically with the support of AI.
