As Merkel Begins New Term, Compromises Could Undo Economic Boom
“From one day to the next, you can be fired.”
To get reluctant Social Democrats to sign up for a coalition government, Ms. Merkel made concessions
that critics say would take Germany back to a time when the country looked more like France, with rules that protected workers from dismissal, provided a broad safety net — and squashed entrepreneurship and growth.
Indeed, the increased power of the Social Democrats — who have advocated greater investment spending
and are resolutely pro-European — could serve to support Mr. Macron, even if Germany backtracks on economic reforms, according to Hans Stark, a professor at the Sorbonne University who studies Franco-German relations.
In Germany, where unemployment is only 3.6 percent, many angry voters in last year’s election deserted the two centrist parties, Ms. Merkel’s Christian Democrats
and the left-leaning Social Democrats, in favor of minority parties, especially the far right Alternative for Germany.
Although the two countries appear to have divergent narratives, Germany remains by far the eurozone’s biggest economy,
and Mr. Macron will need Ms. Merkel to fulfill his regional priorities, like overhauling the European Union’s creaky machinery.
Mr. Schäuble, the finance minister from 2009 until he resigned last year, was a dominant figure not only in Germany
but throughout Europe, where he enforced the austerity imposed on crisis countries like Greece and Portugal in return for eurozone aid.
Domestically, the promises exacted by the Social Democrats during difficult negotiations with Ms. Merkel would make it easier for workers at small firms to organize, allow greater increases in pensions
and put limits on companies’ use of temporary workers.
