President of the CDU Economic Council on inflation

Shortly before the association’s business day in Berlin on Tuesday, Hamker also rejects wage increases to mitigate the inflation away. “Where are we going if companies have to correct the failings of politicians and the European Central Bank (ECB) through wage increases,” said Hamker.

In order to remain competitive in the long term, wage increases would have to be based on company productivity. “The level of inflation must not be the yardstick here.”

Read the full interview here:

Mrs. Hamker, Ukraine war, inflation, supply chain issues. There are already warnings from economists warning of a simultaneous recession in China, the US and the EU. Are you that pessimistic too?
This has nothing to do with pessimism, but with a realistic assessment of the situation. In my opinion, the current lockdown in China – we all know the pictures of cargo ships queuing – has not yet been priced into our current economic forecast. Therefore, there will probably be another dent.

Is there a bright spot in this “perfect storm” that’s brewing?
There will be a ray of hope if European and German politicians now set the right course. For such a storm we have the compass of the social market economy, which is currently in Germany proven over the past decades and which brought us the prosperity from which we all benefit today. We have to create entrepreneurial room for maneuver again and throw the shackles of bureaucracy overboard. We need relief from taxes and duties so that companies invest again and our top performers keep more of what they have earned. A solid social and financial policy is also necessary in the interests of future generations.

>> Read here: Relief laws passed – who benefits and what they bring

Are companies keeping their money together and filling up the warehouses, or is investment still being made?
Companies continue to be heavily burdened by the consequences of the corona pandemic. Added to this is the collateral damage of this terrible war in Ukraine. They have actually been in crisis mode for two and a half years now and have to ward off all exogenous negative influences. Actually, the companies were geared up to meet the challenges of decarbonization and digitization.

Many have prescribed a fitness cure through targeted future programs in order to be prepared and able to invest. That’s more or less gone now. That is why we have established that the propensity to invest is restrained and in many areas is limited to replacement investments. But that won’t help us if we also want to be a leading industrial location in the 21st century.

How do you assess the resilience of the German economy?
The German economy is just with its many medium-sized Family businesses are quite resilient – ​​the corona pandemic has just shown us that.

Would the German economy cope with an oil embargo?
Yes, but let’s not fool ourselves: if the EU ceases to be a buyer, Russia may have to accept price reductions when selling to other countries, but it will still be able to sell the oil.

And a complete gas embargo?
That would hurt us more than Russia and set off a devastating chain reaction in our industry. Germany but with its high share of industrial added value – at 30 percent the highest in the EU – it needs huge amounts of natural gas to maintain its production processes. Unfortunately, whether we like it or not, we have to admit that we are and will remain dependent on Russian gas for the foreseeable future.

“Significantly reduce gas in power generation”

What is your proposal to become independent from Russian gas?
Since gas is indispensable for heating homes and for process energy, we need to significantly reduce it for power generation. Not only in autumn, but from now on, in order to fill the storage tanks faster. In this crisis, the core political task is security of supply. We must also find solutions that are completely non-ideological and open to technology.

How do they look?
Let the 20 coal and nuclear power plants continue to run for a limited time, exploit our own gas reserves in the North Sea and invest more in renewable energies and not to forget energy efficiency. The accelerated construction of LNG terminals, ideally also designed to store hydrogen, is absolutely right, but not feasible until the winter. We need a whole new energy architecture.

But do you fully support the sanctions?
In such a situation, politics takes precedence. That is why we support the sanctions and shoulder their consequences, such as skyrocketing energy prices and the disruption of supply chains. Let’s also consider that until February 24, German companies were also politically willing to do business with Russia. It is unfair to pillory companies now that cannot withdraw completely in one fell swoop. Those who produce there also have a social responsibility towards their employees.

“Down with energy taxes!”

Inflation is also rising, above all due to the sharp rise in energy prices. How should the federal government counteract this?
Now that she’s a profiteer herself from the energy taxation: down with energy taxes! We are now looking primarily at energy prices. Before that she had ECB mainly responsible for fueling inflation. And she comes much too late with her indicated reversal.

What do you think of the tank discount and the nine-euro ticket?
In terms of approach, it is absolutely right to relieve the burden on people who need the car every day, whether on the way to work or to take grandparents to the doctor in town. The way the discount is bridled, there are legitimate criticisms. Well, with the nine-euro ticket, as a regular train passenger I am very excited to see how this will play out from June 1st. The fact that the ticket exists is a typical traffic light compromise: The FDP got the tank discount, the Greens got the nine-euro ticket.

This typical traffic light compromise also includes the “social climate money?
It seems to me that the Secretary of Labor is fine with any excuse for more redistribution and watering can. Good thing is that FDP immediately put up a stop sign. Because the surcharge on Hartz IV was just decided. Also, the overall higher prices will be factored into the calculation of future rates. Social and for the whole Economy would be better suited if the state, as a beneficiary of the energy price explosion, reduced its energy taxes and duties.

the CDU reigned for 16 years. Didn’t much come of the tax relief for small and middle-income earners?
I have already criticized that in the Handelsblatt. Of the CDU has been their brand core in recent years economic policy got lost. Apparently she wasn’t able to assert herself and – in football one would say – to stand her ground. She also received the receipt for this in the federal election. Now we hope for that FDP, which has also disappointed us here so far. Right now we urgently need a relief for the service providers: elimination of the cold progression and abolition of the solidarity surcharge, to name just a few examples.

>> Read here: Climate money – liberals are strangers with a push from the Minister of Labor Unhurt

Of the CDU-boss and your former deputy mr Merz is very quiet in the debate about a sanctions regime for Hartz IV recipients and the amount of the minimum wage. does this annoy you?
First of all, I am happy about the successful trend reversal Friedrich Merz. It stands on the foundation of the social market economy. Above all, I expect this week that the Union will take a clear position against further undermining the role of the social partners in determining the minimum wage. Which we have always regarded as a blatant intervention in collective bargaining autonomy. But what use is a minimum wage of twelve euros to people if it ultimately only has purchasing power of nine euros? That’s purely symbolic politics for election campaigns.

The level of inflation should not be the yardstick

After all, employers could also increase salaries to alleviate the burden of inflation?
Surely you don’t mean that seriously? As far as inflation is concerned, on the one hand we have a base effect, which incidentally was already evident before the Ukraine war. the ECB has played a not inconsiderable part in this development by flooding the markets. Flooding the markets is not compatible with the goal of stable prices. In addition, there is a scarcity effect, which also arose from the disrupted supply chains in the course of the pandemic. And then there are energy prices, which are fueling things even further. Even Norbert Blüm, former Federal Minister of Labor and Social Affairs, said that inflation is the pickpocket of the common man. Therefore, it also contains enormous social explosive force. But right now we have to be careful that excessive tariff increases do not start a wage-price spiral and thus further fuel inflation!

Moderate wage increases, yes, but not in line with inflation?
In order to remain competitive in the long term, wage increases must be based on company productivity. The level of inflation must not be the yardstick here. Where are we going if companies compensate for the failings of politics and the ECB need to correct?

Politicians have already helped during the pandemic with almost inexhaustible rescue packages worth billions. Where is this help taking us in times of rising interest rates?
the ECB has unfortunately conveyed as if she could create infinite money out of nothing. Left-wing financial politicians and economists also succumb to this misconception. We have to be very careful now that we don’t create one rescue package after the other and one exception after the other in the belief that we can overcome a crisis. The watering can principle doesn’t work anyway. Companies are successful in competition if they have the right framework conditions. This is especially true after a crisis. This does not work through permanent subsidization, but only through the relief of bureaucracy in particular, but also of taxes and levies.
Ms. Hamker, thank you very much for the interview.

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