Emergency talks followingGerman reform protests

11th August 2004, Comments 0 comments

11 August 2004 , BERLIN - Following a wave of protests, Chancellor Gerhard Schroeder called back key cabinet members from vacation for emergency talks on softening a new law which slashes unemployment benefits, a government spokesman confirmed Wednesday. Economics Minister Wolfgang Clement and Finance Minister Hans Eichel have been ordered back to Berlin for the meeting Wednesday evening, said Schroeder's chief spokesman Bela Anda. Anda said the meeting, which will include members of Schroeder's Greens coa

11 August 2004

BERLIN - Following a wave of protests, Chancellor Gerhard Schroeder called back key cabinet members from vacation for emergency talks on softening a new law which slashes unemployment benefits, a government spokesman confirmed Wednesday.

Economics Minister Wolfgang Clement and Finance Minister Hans Eichel have been ordered back to Berlin for the meeting Wednesday evening, said Schroeder's chief spokesman Bela Anda.

Anda said the meeting, which will include members of Schroeder's Greens coalition partner, would not yield any concrete decisions and that final adjustments to the law would be announced next month.

He declined to give details of planned changes other than to say leaders would look at how to protect education funds for families whose members are unemployed and that adjustments would be made on how benefits are paid out.

Berlin's Tagesspiegel newspaper said the government is expected to make a one-off change to the unemployment payment system for the January 2005 when the law comes into force.

At present unemployment benefits are paid out at the end of the month but under the new system funds will be transferred on the first day of each month.

Economics Minister Wolfgang Clement thus decided to skip payments for January 2005 when the new law comes into force - a move which has caused outrage among Germany's unemployed.

If the government backs down and pays benefits for January it will cost the state up to EUR 700 million, said the paper.

Under the new law jobless benefits for long-term unemployed will be slashed. Anybody without work for more than one year will receive a flat payment instead of the current generally higher payout indexed to their last salaries.

This will impact the majority of Germany's 4.4 million unemployed of which at least 3.2 million have been without jobs for over 12 months.

A further controversial issue is that new jobless payments will also take into account means testing for the first time in Germany.

This has fuelled fears that things including modest weekend "datcha" retreats, especially favoured in economically hard hit eastern Germany, could be drawn into the calculation.

Germany's overall unemployment rate is 10.5 percent but in many eastern German regions the rate is over 20 percent.

Schroeder insists reforms are needed to keep Germany's creaking social welfare system afloat.

But many in his centre-left Social Democratic Party (SPD) are unhappy over the cuts which have alienated traditional voters and led to growing support for the former East German communists - the Party of Democratic Socialism (PDS).

Earlier this week some 40,000 people took to the streets to protest the government's social welfare cuts. Further weekly demonstrations are planned.

Former SPD leader and ex-finance minister Oskar Lafontaine has threatened to back plans to set up a new German leftist party to challenge Schroeder in 2006 general elections if the reforms are not withdrawn.

DPA

Subject: German news
 

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