Economic Debate Business, Left of Center

Can German small businesses make peace with center-left Social Democrats who are junior partners in Angela Merkel's pro-business government? Two opinion leaders try to answer the question.
The business man and politician are both convinced they know what's best for Germany's economic future.

The relationship between leftist Social Democrats and business is not an easy one. The SPD's Thomas Oppermann and Lutz Goebel, president of “Die Familienunternehmer,” an association representing family-run businesses in Germany, went head to head.

 

Wirtschaftswoche: The Social Democrats just held their Economic Forum. I am sure you were invited to it, Mr. Goebel?

Lutz Goebel: No, I wasn’t. But in the future, we would love to send someone. The establishment of the forum sends the right and long-overdue signal.

Thomas Oppermann: You're more than welcome to join the Economic Forum. The forum shows that SPD and the business world belong together. We just have to talk to each other more.

Mr. Oppermann, those are friendly words. But Mr. Goebel is only waiting for you to contradict yourself.

Mr. Oppermann: Why? Any time Social Democrats talk about the economy, they talk about good work for millions of people. Work, which is about more than just income. And people, who aren't just expense factors. That work only exists in the social market economy, complete with responsible and risk tolerant companies.

Mr. Goebel: That is what we are! But the two women in your party…

Wirtschaftswoche: …you mean the Minister of Labor, Andrea Nahles and the Minister of Family Affairs Manuela Schwesig…

Mr. Goebel: … they only spread mistrust against entrepreneurs. Every positive attempt by the SPD, every reasonable message economics minister, Sigmar Gabriel (who is also a Social Democrat) is sending out, is being thwarted by them…

Mr. Oppermann: Nonsense! Ms. Nahles has pushed for and accomplished the introduction of the minimum wage. She made history. She and Ms. Schwesig are both reforming our social market economy. They are both top performers in our government.

Mr. Goebel, don’t you think that the business world’s harsh critique of the minimum wage was indeed too extreme?

Mr. Goebel: Let's be clear: I'm not interested in introducing starvation wages. I don't want to pay just €4 or €5. But €8.50 per hour across the board? That will make any service job more expensive and will end up in job losses in some regions. What's socially democratic about that? The Social Democrats wanted to abolish some of the scandalously low payments a handful of employers were offering, but is now bullying millions with this law and the paperwork that comes with it.

Mr. Oppermann: You're exaggerating about the paperwork. It's nothing new for companies to have to keep proper records of salaries. And all the new regulation does is to make sure that there won't be any more wages below the minimum wage.

Mr. Goebel, aren't you just trying to make the reform of temporary work and service contracts less harsh by criticizing the minimum wage?

Mr. Goebel: You made that link. We have rigid labor laws at a time we need flexibility. An interconnected and decentralized Industry 4.0 is not going to work with less flexible working conditions.

 

Quelle: www.marco-urban.de
Thomas Oppermann is representing the Social Democrats in this debate.

 

Mr. Oppermann: I agree with you. The government needs to support companies going through structural changes. But a few companies are using temporary work and service contracts to play fast and loose with employment rights – we have to stop that.

A few companies, Mr. Oppermann, that's correct. But the Social Democrats are giving the impression that everyone in the country has a job without any regularity or security.

Mr. Oppermann: That's not true. Germany is doing very well. And I would like to point out that we have to thank former German Chancellor Gerhard Schröder for our economic strength.

Mr. Goebel: … and it would be great if your party would honor and continue his virtues more often again…

Let's move on to another controversial topic. The reform of inheritance tax (the current government wants to get rid of tax breaks for businesses handed down through a family). What do you think about that?

Mr. Goebel: This tax really is questionable: Inherited wealth has already been taxed once. Now the government wants to tax it a second time.

Mr. Oppermann: But the government isn't taxing the same tax payer.

Mr. Goebel: Yes, it is, by having people pay the inheritance tax for their business assets with their private assets. There is something many people are not clear about: Companies in Germany are valued way higher than they should be at the moment because of the extremely low interest rates. [Interest rates affect the way Germany calculates the amout of tax companies pay.]

Mr. Oppermann: I don’t believe that the new inheritance tax will be a large burden. We are talking about €5 billion of a total of €630 billion in tax income. And more importantly: taxation is a fundamental part of our society. Every generation needs to work for part of its wealth. A pure society of heirs would be the end of meritocracy.

Many business people are afraid that they will have to sell parts of their businesses after they inherited them to external investors.

Mr. Oppermann: Family-owned businesses are not only passing on a business, but also tradition, responsibility and jobs. We will keep cherishing those social values. There will be a threshhold of €20 million for each inheritance. This is not a level at which anyone is going to be forced to let in unwanted external investors into the business. We will make sure that it won’t come to that.

Lutz Goebel is representing Germany's small- and medium-sized family businesses and is also an opinion writer with Handelsblatt Global Edition.

 

Mr. Goebel:  It will come to that, if Wolfgang Schäuble (the Germany Finance Minister) does not act. Our companies are something very special to Germany. No other country has as many medium-sized and large family-owned businesses. We want to pass on our businesses to the next generation. But that only works if our children do not refuse to take on the inheritance because taxes are too high.

Are the Social Democrats likely to come up with a surprise announcement that they will lower taxation?

Mr. Oppermann: The Social Democrats are not only in favor, but also known to want to lower income tax. The largest tax reform in the past 30 years came from our party, when we were in a coalition with the Green Party. But first of all, we need to invest. We don’t want to pass on an ailing infrastructure to the next generation. Once we do, we can look at things like Cold Progression (when inflation-only pay rises still push earners into a higher tax bracket, meaning they end up with less income).

Mr. Goebel: Investing and lowering income tax is something that needs to be done anyway in times of economic growth. If not now, when else? I am upset when I see the financial statements of some employees, who are unlucky enough to be in the first tax bracket (category with the highest taxation in Germany).

Mr. Oppermann, are you going to lower taxes after the election 2017?

Mr. Oppermann: If this current trend continues, lowering taxes will not only be possible within this legislative period, but will also be the right thing to do! I'm just saying "bracket creep." You'll see. The Social Democrats are set to surprise you.

Another surprise would be if the Social Democrats would all support the Trans-Atlantic Trade Agreement, or TTIP. What do you think, Mr. Oppermann?

Mr. Oppermann: I think it is very important that we will have a trans-Atlantic trade agreement. If we don’t seize that opportunity, then others will dictate global standards.

Mr. Goebel: I am very impressed how Mr. Gabriel is fighting for TTIP. But within your party, Mr. Oppermann, there's a lot more work to be done.

How do you explain that of all countries, Germany, which is a leader in exports worldwide, is having such an emotional public debate about the trade agreement?

Mr. Goebel: This is probably a case where we see the resurgence of “German Angst.” A comfortable post-capitalism feeling might be part of it, too. We're so much at ease that people want everything to stay as it is – without thinking about building a foundation for tomorrow.

Mr. Oppermann: We're living in a time in which we fear capitalism and some people are anti-American. That creates prejudice and rumors which aren't based on fact. But we take valid concerns seriously: Nothing that we cherish in terms of our social, cultural and public values can be challenged by TTIP.

Mr. Goebel would be the ideal pro-TTIP guest speaker at the next Social Democrats event…

Mr. Oppermann: Mr. Goebel has said many things that Social Democrats would be happy to hear. I hope I didn’t damage his reputation by saying that… (laughs)

 

This story first appeared in Wirtschaftswoche magazine. To contact the author: [email protected] and [email protected]