Merz convenes key summit on reforms in final push before summer break

German Chancellor Friedrich Merz is convening a closely watched summit with top business and labour representatives on Wednesday, as his government prepares for an intensive month of negotiations on a broad package of reforms ahead of the summer break. 

Merz's administration has struggled in recent weeks to agree on several key issues, including reforms to the labour market, social policy, taxes and cuts to bureaucracy.

Among those due to attend the meeting at the Chancellery in Berlin on Wednesday are senior politicians from Merz's conservative alliance - made up of his Christian Democrats (CDU) and the Bavaria-only Christian Social Union (CSU) - and their coalition partners from the centre-left Social Democrats (SPD). 

In addition, leading figures from business groups such as the Confederation of Germany Employers' Associations and unions, including the German Trade Union Confederation (DGB), are expected to appear. 

Government ministers have sought to dampen expectations of a major breakthrough at the summit, but time is running out for the coalition to reach an agreement before lawmakers leave Berlin after the final parliamentary sitting on July 10. 

Polls have shown the coalition parties sliding for months ahead of a trio of important state elections in September, with Merz's approval ratings plunging amid mounting frustration at the government's failure to turn around the struggling German economy. 

Ahead of the meeting on Wednesday, top employers' associations said in a joint statement that it could present an opportunity to pursue a joint reform agenda.

"The business and employers’ associations are prepared to play their part in the necessary compromises as part of a comprehensive package for greater competitiveness, growth and employment," the statement read.

However, DGB leader Yasmin Fahimi has railed against the coalition's "focus on austerity and cuts," slamming proposals to loosen regulations on the eight-hour working day.

Opposition parties have also taken aim at reports of planned cuts, with The Left leader Ines Schwerdtner insisting that "anyone who promises structural reforms now must ensure that life becomes more affordable and work safer and better paid rather than simply burdening people further."

"The federal government and employers will try to outdo each other with proposals for cuts and deregulation," Schwerdtner said. "In the end, that will be sold as a grand 'reform offensive,' when in reality it would be a burden for working people."