Government’s Plan to Help Germany’s Jobless Draws Fire

The details haven’t been officially released yet, but a sweeping plan to reform the labor market ordered by Chancellor Gerhard Schroeder drew sharp criticism Monday from political opponents, who called it too little to rescue Germany’s 4 million unemployed--or to help the embattled incumbent win reelection.

A long-awaited report by a 15-member commission was to have launched a nonpartisan effort to halve Germany’s 10% unemployment rate--the most pressing issue in the campaign for elections next month--within three years.

But Lothar Spaeth, the economic point man on Schroeder challenger Edmund Stoiber’s campaign team, denounced the commission’s five months of work as little more than an election tactic. Others in the opposition Christian Democratic Union and their pro-business allies, the Free Democrats, put the government on notice that they will not be around for Friday’s ceremonial presentation of the report.

Spaeth’s success over the last decade in turning around the mammoth Zeiss optical factory in eastern Germany has made him the opposition’s darling. He had originally praised efforts by Schroeder’s government to loosen strictures on employers to encourage the creation of new jobs.

But as the campaign for the Sept. 22 elections heats up, Spaeth and his political allies are lambasting the report’s conclusions, which have been widely circulated by politicians and journalists, as a watered-down minimum to which all 15 commission members could agree.

“Unanimity turned out to be their primary objective,” Spaeth told reporters. “For that reason, one can no longer find any substantial positions.”

Stoiber rejected the commission’s conclusions as “twaddle.”

At the heart of the recommendations are proposals for a temporary employment agency for young job seekers, massive investment to encourage private business in the depressed eastern states and modest reductions in benefits for long-term unemployed--more than 50% of Germany’s jobless--who refuse to move for a job or take lower-paying positions.

Consideration is also being given to a limited tax amnesty for Germans who have stashed income abroad, in hopes of encouraging them to invest it at home.

“It’s better to have people working in Leipzig than money sitting in Liechtenstein. That’s the principle,” Schroeder told journalists, adding that the commission was still looking for a formula that would not, by rewarding tax cheats, anger those who have followed the rules.

The commission drew together representatives of trade unions and employee associations as well as employers, economists and government officials. Schroeder this year appointed Volkswagen personnel chief Peter Hartz to direct the effort, apparently impressed with the employment record of Europe’s biggest automaker. Schroeder served on the board of directors at VW during his years as governor of Lower Saxony, home to the massive car works in Wolfsburg.

Schroeder’s economic advisors have been less than enthusiastic about the commission’s work. Finance Minister Hans Eichel has openly disparaged its call for the investment of as much as $150 billion in job creation in the five eastern states, where unemployment averages 18%, as a burden on the already deficit-ridden federal budget. Even the Party of Democratic Socialism, the former East German Communists--with whom the Social Democrats share power in two eastern states--has said the proposals are unlikely to improve the plight of jobless easterners.

Many analysts blame Germany’s rigid labor market for the disappointing growth rate in the last two years of an economy that is Europe’s biggest and No. 3 in the world. The commission had been expected to challenge unions’ power to force wage increases and ensure generous benefits and job security.

The conservative newspaper Die Welt quoted economists as saying that the commission goal of cutting unemployment by half is “illusory.” The more supportive Sueddeutsche Zeitung put the onus on Schroeder to confront the unions that have been his traditional support base, or risk losing the election.

“The Social Democrats and Greens must clearly say before Sept. 22 what they plan to implement,” the Munich-based daily said. “The chancellor has the opportunity to show whether he has the strength to tackle the unions.”

Schroeder’s Social Democrats and their allies, the Greens, collectively trail the Christian Democrat-Free Democrat team by 10 percentage points, an Emnid poll for independent N-TV showed Monday. But the same survey indicated that Schroeder remains more popular than Stoiber.