German Wage Plan Winning Supporters
January 15, 2002
A wage plan Chancellor Gerhard Schröder's government hopes will cut down the number of unemployed in Germany is slowly starting to gain acceptance among Germany’s unions and government politicians.
The "combination wage" is the lynchpin of a plan that the coalition government hopes will inject some life into the slumping German economy.
The wage program is an expansion one already in existence in the German state of Rhineland-Palatinate that gives additional money to people who earn low wages. The beneficiaries are those who have been unemployed for a long time and earn between 325 and 870 euro per month.
At current, many of the unemployed are better off on state benefits than in badly paid jobs. The subsidies planned by the government are supposed to remove this disincentive.
Unions supportive, wary of wage plan
After initially heaping scorn on the proposal, union leaders have begun to come around to the idea.
The head of the mighty union Ver.di, Frank Bsirske, gave cautious support to the plan. "Of the discussed models, it remains the most acceptable," he told the Handelsblatt newspaper in an interview that appeared Monday.
Hubertus Schmoldt, chairman of the Mining, Chemical and Energy Union said the wage plan will not solve the unemployment problem in the long run "but it will lead to new jobs." That fact, he told Die Welt newspaper, was enough to win his support.
Election considerations
The coalition Social Democratic Party and Green party government is desperate for ways to bring down unemployment levels which reached their highest level since reunification in January. More than 4 million Germans are without a job, a potentially disastrous statistic for Chancellor Gerhard Schröder’s re-election hopes.
The faltering German economy has already been dubbed the big issue in the upcoming campaign battle between Schröder and Christian Social Union candidate Edmund Stoiber, the minister of economically-prosperous Bavaria. With the election less than a year away, Schröder and the Green party, are desperate brighten the gloomy economic situation.
Critics of the plan, include some within the government, are quick to point out that the economic proposal will only create between 20,000 and 50,000 jobs. In the state in which it was introduced at the beginning of 2001, the combination wage had little success, helping between 400 and 650 people.
The general secretary of the opposition Christian Democratic Union party, Thomas Goppel, said the cost of the plan, between 50 and 70 million euro this year, is not high enough to have much affect.
The plan, he said, was too little too late.
Dispute within the ranks
In response to the criticism, the Green Party, which has said it wants to present itself as the "reform motor" of the coalition government, responded with their own plan last week.
Their eight-point proposal would create 100,000 jobs, Green parliamentary leaders said. The problem: the plan would cost the already cash-strapped German government between 1 and 1.5 billion euro, something Schröder and other government leaders said was impossible.
"There is no breathing room," in the 2002 budget, said a spokeswoman for German Finance Minister Hans Eichel, of the social democrats.
The coalition partners will meet Monday evening to try and reach a compromise.