Caught in the Crosswinds: The Scholz Government’s Social Policy Reforms

This article assesses the social policy agenda and reform record of Germany’s 2021–2024 Traffic Light Coalition led by Olaf Scholz. Despite the coalition’s ambitious promise to ‘dare more progress’, the government achieved only limited and uneven advances across pensions, labour market policy, housing, and family policy. Several high-profile initiatives – including a massive expansion of affordable housing, the Basic Child Benefit and the equity-funded pension reform – failed outright or collapsed amid escalating intra-coalition conflict and tightening fiscal constraints. Others, such as the Citizens’ Benefit, were implemented in watered-down forms. We argue that four factors account for this pattern of partial implementation and repeated policy failure: substantial ideological divergences between SPD, Greens and FDP; deteriorating economic conditions following Russia’s invasion of Ukraine; and a fiscal crisis triggered by the Federal Constitutional Court’s ruling on the debt brake. In addition to the Court, the Bundesrat, due to the lack of a government-aligned majority, acted as an institutional veto player for some initiatives. These dynamics intensified over time, ultimately contributing to the government’s premature collapse. The article concludes by discussing the political and fiscal legacy inherited by the succeeding Merz government and the long-term implications for German welfare state development.