Germany’s proposed tax cut for skilled foreign workers, "socially explosive"

This article was originally published in English

He German Government has made known its Expected preliminary budget plansfollowing months of political controversy that have threatened to bring down Chancellor Olaf Scholz’s governing coalition.

Within Germany, one proposal was more controversial than others, as Habeck’s idea of provide tax relief for skilled foreign workers to close Germany’s skills gap was criticised by a wide range of parties.

Habeck suggested that tax relief, which would be offered to skilled foreign workers, a 30% tax reduction, which would decrease to 10% after three yearswould encourage the arrival of skilled foreign workers to Germany.

The Minister of Economy justified his proposal saying that already It was successfully applied in other countries, such as Austria and the Netherlands.and that: “If more skilled workers come to Germany because they want to work here or because they take advantage of these benefits, then we all win.”

However, The idea has been harshly criticized by other parties.which they claim favours foreigners to the detriment of German citizens.

The spokesperson for economic policy of the Christian Democratic Union (CSU)Centre-right MP Julia Kockner said the proposal amounted to “discrimination against residents of the country”.

CSU General Secretary Martin Huber also criticised the plan, telling the tabloid Bild that the “preferential tax treatment” was “scandalous.”

He far-right party Alternative for Germanywho has made anti-immigration and German nationalism central messages of his campaign, called the idea “slap in the face of German workers“.

Susanne Ferschl of the Left Party said the policy gave foreign skilled workers preferential treatment over other immigrants in Germany, and that could contradict the quality principle enshrined in the German Constitution.

Germany needs foreign workers to remain competitive

The president of the German Trade Union Confederation, Yasmin Fahimi, went so far as to call the idea “socially explosive“.

Germany has gradually fallen from 12th to 15th place on the list of attractive countries for foreigners, according to the Organization for Economic Cooperation and Development (OECD).

The shortage of skilled labour According to the German Economic Institute, the collapse of key sectors would cost the German economy 29 billion euros, with losses increasing tenfold since 2010.

Habeck maintained that the plan had worked in other countries such as Austria and the Netherlands and that, therefore, could be successfully used by Germany to solve the problem of shortage of qualified personnelstating that “it is worth a try” to encourage the qualified foreigners to come to Germany.

The budget, approved last Friday, was on the verge of cause the political collapse of the ruling coalition, as the three ruling parties tried to find a balance between not exceeding the Germany’s constitutional debt limit and commit to increasingly necessary spending.

Other controversial aspects of the draft plan are: Limiting spending on European defence and securitywhich seems to lead Germany to new confrontations with its international partners, They have already accused the country of not contributing enough to Ukraine.

The German government coalitionformed by the centre-left Social Democratic Party, the neoliberal Free Democratic Party and the centre-left Green Party, is increasingly unpopular.

In recent times European electionsthe ruling parties were overtaken by the centre-right CDU and individually by the far-right AfD party, whose members have been involved in a series of scandals.