German welfare reforms blocked

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Germany's upper house of parliament blocked a set of reforms to the country's welfare system on Friday, the first such setback for Chancellor Angela Merkel since losing her majority in May.

Members of the Bundesrat, in which Germany's 16 states are represented, voted down a proposal to raise minimum social benefits that was adopted by the Bundestag lower house last month after a heated national debate.

Under the plans, people on social benefits in Europe's top economy would have received a minimum amount of 364 euros (486 dollars) per month, up from 359 euros previously.

They would also have received an unchanged amount of between 215 euros and 287 euros for children.

The government has estimated there are around 6.5 million recipients of the benefits, including 1.7 million children. They include the long-term unemployed, as well as the handicapped and those too sick to work.

A special committee comprised of members of the Bundesrat and the Bundestag will now attempt to thrash out an acceptable compromise.

Manuela Schwesig, a spokeswoman for the opposition centre-left Social Democrats, said she expected these talks to be "difficult and tense."

In May, Merkel's coalition government lost a crunch election in Germany's most populous state, North Rhine-Westphalia, depriving it of its majority in the upper house.

The changes in the welfare system were due to come into force on 1 January 2011.

© 2010 AFP

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