As Merkel Begins New Term, Compromises Could Undo Economic Boom<br />“From one day to the next, you can be fired.”<br />To get reluctant Social Democrats to sign up for a coalition government, Ms. Merkel made concessions<br />that critics say would take Germany back to a time when the country looked more like France, with rules that protected workers from dismissal, provided a broad safety net — and squashed entrepreneurship and growth.<br />Indeed, the increased power of the Social Democrats — who have advocated greater investment spending<br />and are resolutely pro-European — could serve to support Mr. Macron, even if Germany backtracks on economic reforms, according to Hans Stark, a professor at the Sorbonne University who studies Franco-German relations.<br />In Germany, where unemployment is only 3.6 percent, many angry voters in last year’s election deserted the two centrist parties, Ms. Merkel’s Christian Democrats<br />and the left-leaning Social Democrats, in favor of minority parties, especially the far right Alternative for Germany.<br />Although the two countries appear to have divergent narratives, Germany remains by far the eurozone’s biggest economy,<br />and Mr. Macron will need Ms. Merkel to fulfill his regional priorities, like overhauling the European Union’s creaky machinery.<br />Mr. Schäuble, the finance minister from 2009 until he resigned last year, was a dominant figure not only in Germany<br />but throughout Europe, where he enforced the austerity imposed on crisis countries like Greece and Portugal in return for eurozone aid.<br />Domestically, the promises exacted by the Social Democrats during difficult negotiations with Ms. Merkel would make it easier for workers at small firms to organize, allow greater increases in pensions<br />and put limits on companies’ use of temporary workers.
