German Unions Bust-Up With Ruling Party Over Reforms

By Agence France-Presse Germany's main union group threw down a challenge May 6 to Chancellor Gerhard Schroeder over his controversial economic reform program. The union is breaking off talks on a package it says will not create jobs. "The trade unions stand by their fundamental criticism of the government's plans," said DGB union federation boss Michael Sommer. "We don't believe that one additional job will result from it." The DGB cancelled at short notice a high-level meeting with Schroeder's Social Democrats (SPD) and Sommer said the sides would not meet before a special ruling party congress on the reforms on June 1. The economic and social reform package, known as Agenda 2010, is a new attempt to stimulate Germany's all-but stagnant economy and cut unemployment. It includes a 15 billion-euro (US$16.5 billion) injection of state funds through low-interest loans to local governments and to restore private homes. Regulations protecting employees from being fired would be made more flexible, and benefits paid to the long-term unemployed would be replaced by a new social aid system. The monopoly structure in health care would be dismantled and the government would allow more competition to reduce costs. On May 5 Schroeder implored the unions to help him implement reforms aimed at cutting Germany's alarming public deficit and finding jobs for the more than 4 million people out of work. Late last month, in an effort to ease tensions, Schroeder promised to set up working groups to debate five parts of the project, but he refused to change the central lines of his government's package. Copyright Agence France-Presse, 2003.