Germany Unveils Expansive Plan to Spur Economy

German Finance Minister Theo Waigel unveiled a wide-ranging plan to cut the federal budget deficit and spur economic growth, ending weeks of speculation about the weapons Bonn will use to fight this country’s current stagnation and chronic unemployment.

The proposed package, which would offer incentives to business but which threatens to reduce cherished social benefits, is certain to be the opening shot in a long, watershed battle over basic assumptions about the role of the state, the sharing of wealth and how thoroughly the individual is to be sheltered from the vagaries of the market.

State benefits once considered untouchable--such as health insurance, generous pensions and stringent safeguards against firing workers--would be affected by the proposed package.

The measures cannot be put in effect until passed by the German Parliament, where the coalition government of Chancellor Helmet Kohl faces strong opposition. Support from organized labor will also be essential if the proposals are to go forward, and so far the unions are vowing to fight the plans every inch of the way.

“We will use all means at our disposal, including, if necessary, strikes,” said Roland Issen, head of the DAG white-collar workers union.

Waigel said the measures would cut $32.7 billion from the German budget deficit. Besides suffering from low growth and high unemployment, Germany is now in the embarrassing position of not qualifying for the coming European monetary union because its budget deficit is too high. Germany helped draft the criteria that require participating countries to keep budget deficits below 3% of gross domestic product.

The package attempts to rein in the largess of Germany’s standard social benefits and labor practices, a system now widely considered the envy of the industrialized world. Many business leaders in Germany now blame the system for making this country too costly a place to do business and they have been investing abroad.

To reduce costs to both business and the government, the Kohl coalition wants to:

* Require men to work until they are 65 years old, instead of age 63, before they can retire and claim government pensions; women would work until they are 63, instead of 60.

* End the practice of giving all workers six weeks a year of fully paid sick leave; workers would be paid only 80% of their regular wages if they call in sick.

* Freeze pay for public-sector workers through 1997.