Germany ends phone sick notes in major reform

Germany's coalition government has approved a wide-ranging package of economic reforms aimed at reviving

Germany’s coalition government has approved a wide-ranging package of economic reforms aimed at reviving growth, supporting businesses and modernising the country’s labour and welfare systems.

The measures were finalised after lengthy discussions between Chancellor Friedrich Merz’s conservative bloc and its coalition partners from the Social Democratic Party.

One of the most notable decisions is the abolition of telephone-based sick notes. Workers in Germany will no longer be able to obtain medical leave certificates through phone consultations alone. The government believes the change will help reduce absenteeism and improve productivity in workplaces.

Officials say the reforms are designed to make the economy more competitive and reduce the administrative burden on businesses.

The package includes significant income tax reductions for middle-income households and working families. The government estimates that the average family could receive several hundred euros in annual tax relief under the new measures.

To finance the cuts, higher taxes will be imposed on individuals with very high incomes. Government leaders say wealthier citizens will contribute a larger share towards public finances and economic reforms.

The coalition has also agreed on long-term changes to the pension system. Under the proposed reforms, the retirement age is expected to gradually increase beyond 67 years in response to demographic challenges and an ageing population.

Businesses will receive greater flexibility in hiring practices. Employers will be allowed to offer temporary employment contracts for longer periods than before, a move officials say will encourage job creation and investment.

The government also plans to reduce corporate reporting requirements and simplify regulations that businesses have long described as costly and time-consuming.

Business organisations welcomed the announcement and described the reforms as a positive step towards restoring Germany’s economic competitiveness.

However, labour unions criticised parts of the package and warned that some measures could weaken workers’ protections and job security. Trade representatives argued that labour flexibility should not come at the expense of employee rights.

The reforms come at a difficult time for Germany’s economy, which has struggled with high energy prices, rising labour costs and weaker industrial output in recent years.

Germany’s export-driven industries have also faced increasing pressure from international competition and uncertainty in global trade markets.

The government is seeking to address structural weaknesses in Europe’s largest economy and restore confidence among investors and manufacturers.

The reform package also contains measures aimed at protecting strategic industries and critical infrastructure from unfair foreign competition and excessive external influence.

Economic analysts have described the initiative as one of Germany’s most significant reform efforts in decades. Many believe the measures could improve investment conditions and support stronger growth if implemented effectively.

Others remain cautious, arguing that the long-term impact will depend on execution and the government’s ability to maintain political consensus behind the reforms.

The German government hopes the package will strengthen economic performance, create jobs and place the country on a more sustainable path for future growth.