Germany is set to enforce stricter sick leave regulations, requiring employees to provide a medical certificate from the very first day they are absent from work, as part of a sweeping reform package announced by Chancellor Friedrich Merz on Thursday. The measure aims to tackle high absenteeism rates that the government says are hampering productivity in an economy already facing weak growth, high production costs, and strained public finances.
Key Provisions of the Reform Package
The 34-point reform agenda, unveiled by Merz, includes not only the sick leave overhaul but also income tax cuts for low- and middle-income families, a comprehensive pension system reform, and a reduction of Germany's cumbersome bureaucracy. The government argues these steps are essential to boost productivity and address long-term economic challenges that have weighed on growth.
Under current rules, employees can call in sick for up to three days without a doctor's note. Additionally, sick notes covering up to a week can be obtained after a phone consultation with a doctor—provisions that were expanded in recent years to ease healthcare access and reduce unnecessary clinic visits. The new rule would eliminate these flexibilities.
Economic Context and Government Rationale
Germany's economy returned to modest growth last year after shrinking for two consecutive years. However, the government projects an underwhelming growth rate of just 0.5% this year, a figure negatively impacted by the fallout from the Iran war. Merz has repeatedly voiced concern over the country's sick leave rates, stating they are affecting businesses and the broader economy.
“These reforms all have one goal: We are setting out into the future. We are strengthening ourselves so that we can live well in these new times,” Merz said. “From the very beginning, we set an agenda with a single goal in mind: We want to get Germany back on track. It is now clear that this is possible,” the conservative chancellor added.
Tax Cuts and Bureaucracy Reduction
The government has paired the sick leave changes with broader economic measures. Income tax cuts for low- and middle-income households, simplification of tax filings and reporting requirements, and a reduction in bureaucratic procedures that businesses have long complained about are central to the package. Once fully implemented in 2028, the tax cuts are expected to provide an annual tax break of about 600 euros for a family with two working parents, two children, and a total taxable income of 60,000 euros. The total tax relief from the reform amounts to approximately 10 billion euros per year.
Pension System Overhaul
Details of the pension system overhaul were not fully disclosed in the announcement, but it is expected to address long-term sustainability issues as Germany's population ages. The reform package as a whole is designed to strengthen the economy and improve living standards, according to the government.
Impact on Businesses and Workers
Business groups have long called for measures to reduce absenteeism, which they say costs the economy billions annually. However, labor unions and employee representatives have criticized the stricter sick leave rules, arguing they could pressure workers to come in when ill, potentially worsening health outcomes and spreading illness. The government counters that the reform will boost productivity and reduce the burden on public finances.
