Germany is looking at tax breaks and welfare reforms to encourage people to work more, joining the UK and the Netherlands on a quest to tackle the region’s economic malaise by reversing a big drop in average working hours.
After months of debate, German Chancellor Olaf Scholz’s ruling coalition is preparing a “growth plan” to be unveiled as soon as next month that aims to make working longer hours more rewarding. Options under discussion include tax cuts on overtime and a benefits overhaul, according to people familiar with the plans.
The drop in working hours across Europe since the pandemic has exacerbated the region’s economic underperformance and poor competitiveness, attracting policymakers’ attention at a time when ageing populations are shrinking workforces.