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German government weighs one-off payment to counter union pay demands

Published June 26,2022

German Chancellor Olaf Scholz's centre-left government is reported to be considering a one-off tax-free payment to residents with a view to heading off high pay demands from the country's trade unions in the face of sharp price increases.

Government sources confirmed the plan was being investigated, following a report in the Sunday edition of the mass-circulation Bild newspaper.

In return, the country's powerful trade unions are to be asked to moderate pay demands so as not to give a further turn to the inflationary spiral, Bild reported.

"If the employers and the unions agree to one-off payments to workers, with a view to cushioning particularly difficult times in the months head, then the state could reasonably supplement these," Rolf Mützenich, the parliamentary head of Scholz's Social Democrats (SPD), told the Saturday editions of the Funke media group.

Germany, like other countries, is facing a surge in prices caused largely by supply problems. The war in Ukraine has added to pressure on supply chains resulting from the coronavirus pandemic.

Scholz is to meet representatives of both employers and employees on July 4 to discuss a plan of action to counter the rising prices.

Finance Minister Christian Lindner, the head of the pro-business Free Democrats (FDP) in Scholz's coalition, expressed reservations via Twitter. One-off payment could make sense, he said.

"But where companies are making strong profits, subsidizing the employer is not appropriate. Expanding the corona bonus across the economy would scarcely be affordable," Lindner said in reference to earlier government measures to counter the economic effects of the pandemic.