Germany: Public contracts only for companies complying with collective agreements

The German parliament has passed a new regulation that is crucial for the public procurement market and working conditions. The Collective Bargaining Loyalty Act, known as Tariftreuegesetz, redefines the rules for spending budget funds. From now on, every company bidding for a federal contract must prove that its employees are compensated according to standards negotiated between trade unions and employers. This decision has been met with enthusiasm from the left-wing side of the political scene, including the Minister-President of Mecklenburg-Vorpommern, Manuela Schwesig, who sees it as a step towards pay justice. Collective labor agreements form the foundation of the German model of a social market economy, stemming from the post-war principle of social partnership, although their coverage has been systematically declining in recent decades. Criticism, however, flows abundantly from business circles and the opposition. The CDU, although it ultimately did not block the bill, expressed serious doubts about its impact on the economy's competitiveness. Business representatives point out that the new requirements are a huge administrative burden that could discourage smaller entities from participating in tenders. In public debate, voices are emerging that label the law a "growth brake" and accuse the government of being a "pawn of trade unions." Parallel to this debate, in states such as Schleswig-Holstein or North Rhine-Westphalia, local SPD structures are demanding stricter similar regulations at the regional level, while the opposition in Saxony or Brandenburg highlights their ineffectiveness. The German public procurement system is based on spending over 500 billion euros annually, making the state the largest consumer of goods and services in the country. Beyond wage issues, other significant themes have resonated in German political discourse. Interior ministers confirmed they do not plan to exclude the American software Palantir from use by the police, despite data privacy concerns. Meanwhile, in the Swiss context, following the fire in Crans-Montana, insurers rejected claims for additional payments, and a higher political rank signaled no plans to return public funds involved in projects there. All these events show growing tension between state regulation and the free market in Western Europe.