May 12, 2026
Chancellor Friedrich Merz faced whistles, boos and calls to “tax the rich” when he urged trade unionists to accept difficult changes so Germany can regain economic momentum. Speaking at the German Trade Union Confederation (DGB) conference in Berlin, Merz warned the country has suffered years of stagnation and must “pull itself together” to protect jobs, public services and pensions.
Merz argued that Germany is losing industrial jobs and risks falling behind internationally unless it tackles long-standing structural problems — from slow digitalization to demographic pressures and heavy bureaucracy. He blamed higher energy and production costs linked to global turmoil, but also said many difficulties are homegrown. He said growth is essential to sustain the welfare state and vowed to keep seeking compromise on reforms to health care, pensions and taxes that he wants to last a decade.
The speech provoked a heated response from delegates. Some union leaders and attendees publicly challenged Merz’s framing and priorities. DGB chairwoman Yasmin Fahimi reminded the crowd the unions have set up their own pension commission after being excluded from the government’s panel, highlighting tensions within the chancellor’s coalition and pressure on the SPD to counter Merz’s proposals. Video of the moment Merz was booed circulated widely.
Other developments across Germany:
Customs to expand amid parcel boom
Germany plans to hire roughly 1,500 additional customs staff this year as cross-border parcel volumes surge. Customs processed nearly 790 million shipments last year, up from 595 million the year before, and collected about €157 billion in import taxes and duties in 2025. Authorities say they need more resources to cope with low-cost imports, counterfeit goods and banned items. The EU is also tightening rules: the duty-free threshold for small packages under €150 will be removed in July and an extra EU-level fee is due to be introduced by November, increasing checks on environmental and consumer protection standards.
Cybercrime costs hit record levels
New figures show cybercrime-related damage in Germany rose to about €202 billion, with roughly 334,000 offenses recorded in 2025. Interior Minister Alexander Dobrindt said many attacks originate abroad and the government plans a new “active cyberdefense” law aimed at disrupting attackers’ infrastructure. Officials warned that artificial intelligence is lowering the barrier for sophisticated scams and making phishing and other attacks more convincing. Ransomware remains a major threat: reported incidents increased and recorded ransom payments climbed, even as fewer firms pay attackers. Investigations are complicated by the fact that nearly two-thirds of cases originate abroad or from unknown sources, and clearance rates for such attacks remain very low.
Lufthansa moves to increase ITA stake
Lufthansa plans to raise its holding in Italy’s ITA Airways to 90% this summer, exercising an option that would increase its stake from 41%. The second tranche is set at a fixed €325 million and requires regulatory approval, with completion expected in early 2027; Lufthansa could acquire the final 10% from 2028. The deal comes with competition remedies — including giving up slots in Milan and Rome — and follows what the airline described as a rapid operational integration since its initial investment.
Many neglect retirement planning
A survey cited by German media found only about 40% of workers are seriously engaging with retirement planning, a slight improvement from recent years but still well below levels seen in 2020. People in weaker financial positions are least likely to plan, meaning those who would benefit most from structured saving and advice are often least prepared.
Inflation edges higher
Germany’s inflation rate rose to 2.9% in April, up from 2.7% in March. Energy prices were the main driver, increasing about 10.1% year on year; fuel costs jumped more than 26% and heating oil rose around 55%. Core inflation, excluding food and energy, stood at about 2.3%. Officials said the Iran war and other global developments are putting renewed pressure on energy costs and consumer prices.
What’s next
Merz said reform proposals — notably on pensions — will be developed before the summer parliamentary recess. Whether the chancellor can turn tense exchanges with unions into workable compromises will determine whether his push for growth-oriented reforms gains traction or becomes another point of political contention.