Whilst Germany’s two main political parties – the Social Democratic Party (SPD) and the Christian Democratic Union (CDU) - both agree that employees should receive a share of business profits, they do not agree how this goal should be achieved.
The SPD favours employees having the opportunity to buy shares in a “Germany Fund”. Companies would also pay into the Fund and would be able to access it for capital. The Fund would pay its employee shareholders dividends and would also be responsible for repaying their original investment. The rationale behind the Germany Fund is to minimise the risk of market fluctuations and company bankruptcies.
Under the SPD proposals, married couples with an annual income of up to €40,000 (€20,000 for single people) would be able to invest up to €400 per annum in the Fund. The Government would subsidise this with a further €80 and would also act as a guarantor to the Fund.
By contrast, the CDU is proposing that employees have the opportunity to buy an equity share in their own employer of up to €1,000 (with tax incentives). The CDU’s approach aims to create a stronger link between employees and their employers in the hope that this will lead to higher motivation and improved productivity amongst workers. The German Government is unlikely to legislate in this area in the immediate future.