Home News Final push to agree Schroeder reforms

Final push to agree Schroeder reforms

Published on 10/12/2003

10 December 2003

BERLIN – Germany’s government and conservative opposition on Wednesday opened final make-or-break talks aimed at hammering out a deal on economic reforms sought by Chancellor Gerhard Schroeder to heal the country’s sickly economy.

Talks began with no apparent progress over the most controversial issues of what Schroeder calls the Agenda 2010: tax cuts, labour market liberalization and collective bargaining.

Following days of optimistic government spin, the straight-talking deputy head of Schroeder’s Social Democratic (SPD) parliamentary group, Ludwig Stiegler, admitted he was only 65 percent sure of winning a deal.

Schroeder’s left-leaning government won approval for the package of measures in parliament’s lower chamber, the Bundestag, earlier this year.

But last month the opposition Christian Democratic alliance (CDU/CSU) dominated upper house, the Bundesrat, sank the legislation and a total of 12 bills have now gone to a 32-member mediating committee comprised of members from both chambers.

Conservatives are demanding deeper labour market liberalization, less blanket collective bargaining and far less borrowing to fund next year’s EUR 15.6 billion income tax cut.

The final mediating session could go on through the weekend and there is speculation Schroeder may call an emergency meeting with CDU leader Angela Merkel on Sunday after he gets back from a European Union summit in Brussels.

Business leaders are urging the politicians to hammer out an agreement in the coming days so the laws can come into force on 1 January 2004.

“Failure to reach an agreement would be a catastrophe,” warned Michael Rogowski, head of the influential Federation of German Industry (BDI).

Both sides needed to make compromises, said Rogowski, adding: “There will be a compromise in the end but I hope it won’t be a rotten compromise.”

Reforms are seen as urgent given that the German economy, while picking up speed during the final quarter of this year, is still expected to post zero growth for 2003 in what Finance Minister Hans Eichel admits is a third year of stagnation.

Unemployment is 10 percent and expected to rise during the winter.

Germany has the biggest economy in the 15-nation EU and is third biggest in the world after the US and Japan.

Subject: German news