German bosses: Save labour reforms

17th October 2007, Comments 0 comments

17 October 2007, BERLIN (AFP) - German employer federations have urged the government to maintain economic momentum by pursuing unpopular labour reforms launched by former chancellor Gerhard Schroeder.

17 October 2007

BERLIN (AFP) - German employer federations have urged the government to maintain economic momentum by pursuing unpopular labour reforms launched by former chancellor Gerhard Schroeder.

In a letter, outtakes of which were printed in Wednesday's Bild newspaper, the bosses pressed the left-right government coalition not to roll back measures they credited with helping to jumpstart Europe's biggest economy.

"Those in the (Social Democrat) SPD and (conservative) Christian Union who want to water down reforms or backtrack on them threaten our country's economic recovery," the letter said.

Schroeder, a Social Democrat, introduced an economic reform package known as Agenda 2010 under his centre-left government.

One of the most controversial planks of the programme passed in 2005 cut the dole for the long-term unemployed, putting them on subsistence-level benefits.

The Social Democrats have been locked in a power struggle this month between party leader Kurt Beck, who favours an extension on benefits for older unemployed Germans, and vice chancellor Franz Muentefering, who argues that the measures have pushed thousands of jobless to find work.

The bosses' letter was intended to back Muentefering in the tug-of-war.

But Muentefering, who is also labour minister in conservative Chancellor Angela Merkel's government, conceded defeat Tuesday, noting that his view did not have a majority in the SPD, which is expected to approve Beck's proposal by a large majority at a party congress next week.

The next showdown is to come in early November when the coalition meets to hammer out a "reform of the reform".

Merkel's conservatives have said they will only accept measures that do not raise government expenditures and have pushed for a cut in non-wage payroll costs in a bid to create jobs.

Beck has said he would accommodate those demands.

Economists and business leaders argue that the Agenda 2010 reforms, along with solid economic growth, have helped cut chronic unemployment from 11.7 percent in 2005 to 8.4 percent in August.

But leftist leaders and a majority of voters believe they unfairly punish those on the lowest rungs of the economic ladder.

In their letter, the federations -- the industrial BDI, the employers' group BDA, the DIHK chambers of commerce and industry and the ZDH skilled crafts sector association -- said "Germany must not tumble into populist policies that look to the past while the rest of the world faces up to necessary changes."

AFP

Subject: German news

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