Berlin backdown over joblessreforms may not be enough

12th August 2004, Comments 0 comments

12 August 2004 , BERLIN - German Chancellor Gerhard Schroeder's centre-left government remained under pressure Thursday as fears grew that a watering-down of planned reforms would fuel further public disquiet. The government was left reeling Monday when planned demonstrations against jobless benefit cuts resulted in 40,000 people taking to the streets in cities throughout unemployment-hit eastern Germany. On Wednesday, Schroeder ordered ministers back from vacation for an emergency cabinet session to water

12 August 2004

BERLIN - German Chancellor Gerhard Schroeder's centre-left government remained under pressure Thursday as fears grew that a watering-down of planned reforms would fuel further public disquiet.

The government was left reeling Monday when planned demonstrations against jobless benefit cuts resulted in 40,000 people taking to the streets in cities throughout unemployment-hit eastern Germany.

On Wednesday, Schroeder ordered ministers back from vacation for an emergency cabinet session to water down the law, dubbed "Hartz IV" after Volkswagen executive Peter Hartz who is its architect.

Changes to exemptions and a one-off payment in January are minor and do not alter the backbone of the law - but they will cost the government up to EUR 800 million.

Schroeder's centre-left government - battling record opinion poll lows as Germany slowly shakes off three years of economic stagnation - clearly hopes such tinkering with the jobless benefits law will defuse further protests.

There is concern however among some observers that by giving in so swiftly to protests the government may fuel bigger demonstrations against the bill, which slashes payments for the long-term unemployed and introduce means testing for the first time in Germany.
"I doubt whether these adjustments will end the ... protests - on the contrary - they will probably encourage them," warned Klaus Zimmermann, president of the German Institute for Economic Research (DIW) in Berlin which serves on Schroeder's Council of Economic Advisers.

Zimmermann, in a Berliner Zeitung newspaper interview, termed the reforms "appropriate and legitimate" and said it was vital they by implemented without any further changes.

Protest organisers and trade unions meanwhile said the government climbdown was merely an initial victory in the struggle against the unpopular bill.

"The protests will continue ... we want to get rid of Hartz IV," declared Andreas Erholdt, organiser of a demonstration last Monday in the eastern German city of Magdeburg.

Harald Reutter, spokesman for public sector union ver.di said union members were now gunning for a clause making it hard for the unemployed to turn down jobs deemed to be lower than those they previously held.

"We have to stick to our course on the really difficult issues," said Reutter.

Economics Minister Wolfgang Clement, a staunch supporter of reform, has strongly criticized upcoming demonstrations and insisted they would not influence the government.

"Pressure from the street plays absolutely no role," he said.

Clement held a hastily arranged news briefing Thursday to insist there would be no further compromises to the unemployment reforms, a move many viewed as a damage limitation exercise.

"There will be no more cut-backs ... no further changes are planned - not by anybody," he said.

Nevertheless, Schroeder's decision to water down the bill is clearly a disappointment for Clement, the most pro-reform cabinet member of Schroeder's Social Democratic-Greens coalition.

Clement said the government's overall economic reforms, including tax cuts and limited labour market liberalisation, remained essential to restore the German economy in which unemployment is still stuck at over 10 percent.

He hailed as "extremely good news" second quarter German GDP growth of 0.5 percent, as shown in data officially released Thursday.

The government predicts the economy will grow between 1.5 percent and 2 percent this year and Clement said the higher figure was now far more likely.

DPA

Subject: German news
 

0 Comments To This Article