1. Context and current situation
Following the 2026 pension reform in Germany, the Central Association of German Crafts (Zentralverband des Deutschen Handwerks, ZDH) is calling for a second relief package. The association argues that the planned rise in pension contributions would largely cancel out recent tax and contribution relief intended to support employers and employees. ZDH President Jörg Dittrich welcomed the reform in principle but stressed that the expected increase in contributions from 2028 must be compensated to protect competitiveness in the craft sector.
Key facts at a glance
- Pension reform passed in 2026 aims to secure long-term financing of the pension system.
- ZDH fears that higher pension contributions will neutralize existing relief measures.
- ZDH calls for a second relief package to lower overall wage-related additional costs (Lohnzusatzkosten).
- Social associations such as SoVD and VdK emphasize solidarity and warn against pension cuts or raising the retirement age.
2. Why the craft sector is pushing for lower social contributions
The craft sector consists largely of small and medium-sized enterprises that are sensitive to changes in labor costs. For many craft businesses, social contributions form a significant share of total personnel expenses. The ZDH argues that if pension contribution rates rise, the relief from lower taxes and other measures will be offset, leaving businesses with higher net labor costs. That, they say, risks reducing hiring, squeezing margins and making it harder to invest in apprentices and training.
Economic effects on small businesses
- Higher social contributions increase total labor costs and may slow job creation.
- Smaller firms have less capacity to absorb sudden cost increases, which can hurt competitiveness.
- Long-term investment in training and apprenticeships may be reduced if margins tighten.
3. The demands from the crafts association
The ZDH has put forward concrete requests to ensure the reform’s effects do not undermine relief measures. Key demands include a fresh relief package aimed at reducing wage-related additional costs back toward the roughly 40 percent level mentioned by association leaders. The ZDH also wants any expected pension contribution increases from 2028 to be at least partly offset by lower contributions in health and long-term care insurance. In addition, the association calls for a public discussion about increasing personal responsibility in the healthcare system as one possible lever.
- Introduce a second relief package targeted at lowering Lohnzusatzkosten.
- Offset pension contribution rises by reducing health and care insurance contributions.
- Discuss reforms that increase patient responsibility in the health sector to lower overall costs.
- Ensure measures are phased in to avoid sudden shocks to small businesses.
4. Views from social associations and the wider debate
Other actors in the debate highlight different priorities. Social associations such as the Social Association of Germany (SoVD) and the VdK warn against cutting pensions or raising the statutory retirement age. They call instead for a more solidarity-based financing model and for more tax funding to cover benefits that are not strictly insurance-based. The discussion has therefore shifted from whether reforms are needed to how relief should be delivered.
Core questions shaping the debate
Policy choices now center on several options: should relief come mainly from lower social contributions, larger out-of-pocket payments, increased capital-funded pension elements, or stronger state financing through taxes? Each pathway involves trade-offs between fairness, sustainability, and the impact on businesses and beneficiaries.
5. Options, trade-offs and next steps
| Option | Potential benefit | Main drawback |
|---|---|---|
| Lower social contributions | Reduces employer labor costs and supports hiring | May shift burden to taxpayers or require cuts elsewhere |
| Higher co-payments or more personal responsibility | Can reduce public spending quickly | Risks increasing inequality and burdening low-income households |
| More capital-funded elements | Diversifies retirement income sources | Requires time to build funds and can expose savers to market risk |
| Stronger state financing (taxes) | Protects low-income groups and maintains solidarity | May require higher taxes or reallocation of public spending |
| Balanced approach | Combining measures can spread risks but needs careful design and stakeholder agreement | |
There is no single easy answer. A balanced package that phases measures in, protects vulnerable groups, and combines cost control with targeted relief is likely to gain the broadest support. Dialogue between employers, social associations and policymakers will be essential to design solutions that keep the pension system sustainable while not unduly burdening the craft sector or pensioners. The coming months should focus on concrete, realistic proposals that reconcile competitiveness, social protection and fiscal responsibility.
