Our companies are the best social systems

Employer President Dr. Rainer Dulger in an interview with the Frankfurter Allgemeine newspaper

FAZ, November 26, 2020. The new president of the BDA, Rainer Dulger, warns against the assumption that the economic problems can be vaccinated away. His recipe for success: less social security contributions - more entrepreneurial spirit.

Mr. Dulger, last year you called Federal Minister of Economics Peter Altmaier a "wrong choice". Does this judgement still apply?

Federal Economics Minister Altmaier has made a strong mark in the crisis. He was quick to recognise where economic policy must now act swiftly, where companies need help. And he has tackled them. That deserves respect. In this special situation, Mr Altmaier, together with the Government and Parliament as a whole, has acted very effectively and appropriately. Incidentally, this is the envy of many in the world.

Among other things, you criticised Altmaier at the time for his "planned economy" industrial policy. Is the course more market-economy-oriented in the meantime?

Of course, other things are at the forefront of this pandemic. My point therefore remains all the more important: we must also think about the time after Corona and set the right course. That is why we must now ensure good economic conditions in Germany so that the jobs of tomorrow are created here and not elsewhere. This requires more trust from politicians in the market economy and entrepreneurial spirit than we have seen recently.

Are you nevertheless satisfied with the many billions of euros in state aid - from car purchase bonuses to short-time working allowances?

Yes. I recognise that we - that businesses and employees - are getting a lot of government help in these particular times. This is indeed not a pure market economy. And that is precisely why it is so important that this state of affairs does not last longer than is absolutely necessary.

How far are we on the road through the economic valley? And how much progress is the prospect of a vaccine already making today?

Apparently, we can get away with a decline in GDP of around 5 percent this year. That in itself is good news, because it would be more benign than in the 2009 financial crisis. And as for the vaccine: in fact, the very prospect of it is helping to stabilise things. A possible end date for the pandemic gives new perspectives to any entrepreneurial planning for the future - even if the date is far away, because vaccinating our population will take time.

Will the recovery then be as buoyant as it was ten years ago?

I remain sceptical because, unfortunately, not all of the economic problems that have arisen can be vaccinated away. Even before Corona, the industry was in recession and undergoing difficult upheavals. I'll just mention a few key words here: digitalization, decarbonization. These are challenges that did not exist ten years ago - and which now require all the more political willingness to reform.

First of all, the "November lockdown" will now be extended until Christmas. How much more of this can the economy take before there are further structural breaks with negative long-term consequences?

The sooner the economy can return to normal across the board, the better it will be for the longed-for economic recovery. But even so, it is of course entirely justified if the top priority for politicians at the moment is to prevent the health service from being overloaded. And all the better if, at the same time, they succeed in keeping schools and daycare centres open.

As president of the employers' association, you also represent the hospitality and event industry. They are probably a bit more critical?

Of course, there is much that can be debated in terms of proportionality and effectiveness. I, too, never had the impression that restaurants were really hotbeds of infection. This could certainly have been handled more flexibly. Nevertheless, I am sticking to my guns, not least because I keep hearing it reflected in this way from foreign business partners: Overall, we have come through this crisis well with our course of pandemic control and have not overburdened our health system and kept it running.

And so it's okay for them now, macroeconomically, to extend the restrictions until Christmas?

Of course, I do not like it and I would wish for something else from the point of view of the economy. but the fact is, unfortunately, that we have to get a grip on this pandemic and protect our population. It is therefore all the more important that an end to this situation is in sight.

How and by whom should the bill for all the state aid be paid later, according to their ideas?

Economic dynamism is the best solution. Successful, strong companies that can offer secure jobs to as many people as possible ensure that in the end a lot of money comes into the public coffers via taxes and social contributions. That was also the recipe for success after the financial crisis. Unfortunately, I am concerned to see that this time a political competition is brewing over which and how large the tax increases should be in the near future. This is not the way to create economic dynamism and a willingness to innovate - it's more likely to stifle the hoped-for upswing.

Then what?

We need a policy that enables and encourages entrepreneurship, that strengthens the willingness to take risks and invest instead of penalising it. And we need a reform of the social systems so that costs and social contributions do not continue to get out of hand. This includes effectively capping contribution rates at 40 percent of gross wages for the future. And our permanent demand for a moratorium on burdens for the economy remains just as topical. But this can only be a first step. Because for more dynamism, real relief is also needed.

Do you seriously think there will be no tax increases after the federal election?

I expect that we will have a heated discussion about tax increases. And I advocate all the more strongly that we then have at least as intense a discussion about real reforms for more economic dynamism.

Would you be willing to do both at the same time - more reforms versus tax increases?

No. I stick to my recipe for success: reforms for economic dynamism bring higher tax revenues without having to raise tax rates. As long as this path is not taken, there is no basis for tax increases. Germany already burdens its economy with higher corporate taxes and higher social security contributions than most industrialised countries in the world.

There is a one-off crisis with one-off special burdens for the state. The concept of a one-off special levy on large fortunes will probably be politically acceptable.

Quite honestly, I am not interested in what could be politically represented how and when at this point, it must also be objectively required. We need relief for companies, without which there will be no prosperity and secure jobs in this country. And we don't need anything else for the time being: no asset levies - and not any supply chain laws, temporary employment bans, home office laws or whatever else is planned and in the quiver. We need more flexibility and freedom for our companies. And we need a moratorium on burdens that politicians will adhere to for more than a Sunday speech.

How can the 40 per cent limit for social contributions be maintained without ever-increasing taxes being channelled into the social security coffers?

The Confederation of German Employers' Associations had set up a welfare state commission specifically for this purpose, which delivered convincing proposals in September. These include, for example, a further adjustment of the retirement age to the rising life expectancy...

... and how is it in care, where everyone expects more pay, more staff and less financial contribution?

There is no such thing as higher benefits for less money; someone always has to pay. If there is agreement that this additional expenditure is particularly important, then we need to make savings elsewhere in the social system. Every entrepreneur must do the same: if costs rise in one area, other costs must fall. Politicians must also get used to this again. We need a cap on social security contributions at 40 percent - not just as a declaration of intent, but legally binding, preferably with constitutional status.

You are calling for a moratorium on burdens on business. In your view, is the planned statutory women's quota for management boards a case for the moratorium?

I fully support the aim of this debate - namely, to get more women into management positions. However, I do not like the means of the statutory quota. I know these problems from my everyday business life, although my company will not fall directly under the planned regulation: We recently had a department head to fill - my wish was to fill it with a woman. But my recruiter laughed at me for approaching him with such a request and said, "Feel free to take a number. We'll put you on the waiting list - 80 other companies are looking too." What I'm saying is that when politicians blindly push companies into such a position and threaten them with penalties to boot, it has nothing to do with a moratorium on burdens. And it also ignores the current reality on the labour market.

Why does the business community as a whole get so little traction with its warnings?

Politicians are rapidly becoming accustomed to interfering ever more deeply in the decision-making freedom of companies, regulating and subsidising them in equal measure. But this does not change the problem: politics is not the better entrepreneur. Prosperity and future viability cannot be secured in the long term in this way.

Should the major trade associations merge to find new strength?

We are well positioned, we can articulate our interests well. Moreover, the German economy is so diverse: we have the skilled trades, industry, trade, the service sector and many more - so it is only good to be able to articulate our interests to politicians with many voices. And these voices do not contradict each other when it comes to the goal of a policy for new economic dynamics. Together they are all the stronger!

Politics is facing a watershed, the Merkel era is coming to an end. Who do you have your fingers crossed for the CDU party chairmanship: Laschet, Merz or Röttgen?

No matter who it is, the German economy has clear expectations of him. We need a determined approach to reforms in order to strengthen our business location.

You trust all three of them?

All three have their competences, or rather all four. After all, Prime Minister Laschet is entering the race with a team solution with Jens Spahn.

But the Greens could also play a part in the new government - with more climate protection and tougher targets for the car industry. To what extent do you see new opportunities for the economy?

That we need an economic and ecological balance is undisputed. And we can also find a way to continue to be ecologically successful with our economy. Incidentally, my day-to-day business as an entrepreneur is to earn money by protecting the environment - we use water treatment technologies to treat industrial wastewater in such a way that it does not harm the environment. Our entire economy can be successful with ecological concepts, but on one condition: Political guidelines must be open to technology. When it comes to the best possible climate protection, the government must not dictate which engine is right or that electricity should only come from wind - the best and most effective solution must be able to prevail. If that is guaranteed, the Greens will have us on their side.

What can employers do to prevent Germany from falling into hostile camps like the United States? Perhaps higher wages, as the trade unions are demanding?

I don't think that's enough of a leap. But it has to do with work: Work unites us, it creates social peace. The only effective means of combating poverty is work. And the best functioning social systems are our businesses, because they also offer protection against loneliness, offer support in times of crisis. Everyone must understand that without a functioning economy there can be no prosperity and no social cohesion. If each individual is involved in his or her workplace and helps to keep the business running, then that creates cohesion.

What drives you to become employer president? Goals beyond the politics of the day?

As President of the Employers' Association, I want to get stuck in and shape things - that's probably what drives me the most. Above all, I would like to continue to work for the unity of the employers' associations - because we are only strong together! As an entrepreneur, I am concerned that so few young people want to become their own boss. The opportunity to build a business, to create the jobs of tomorrow, is something many young people no longer consider. I notice this again and again when I ask about it in schools or when I talk to young people. If entrepreneurship no longer has any value in our country, then that is dangerous. And in my new role, I want to do everything I can to change that.

Source: Frankfurter Allgemeine Online, 26 November 2020

Questions from Dietrich Creutzburg and Heike Göbel

Link to interview: https: //bit.ly/3meETsz