Budget cuts

German Finance Minister Wolfgang Schaeuble has riled opposition parties after suggesting in a newspaper interview that unemployment benefits should be cut to save the state money.

"We must organize our social security system so that it motivates regular employment, and doesn't create incentives to the contrary," Schaeuble told the Frankfurter Allgemeine Sonntagszeitung weekend newspaper. "That could even lead to savings in our budget."

In order to reign in Germany's large budget deficit, the finance minister is under pressure to make dramatic cuts in the 2011 budget. These cuts could be finalized in a coalition convention on June 6 and 7, he said, and they would be done with transparency and without "budget tricks."

"I have not pulled tricks so far, and I will not pull tricks in the future," he said.

Hans-Peter Keitel, president of the Federation of German Industries, told newspaper Bild am Sonntag that funding for retirement benefits and the controversial Hartz-IV unemployment program should also be reduced. He added that only education, research and development should be immune to budget cuts.

"In order to clean up our state finances, everyone must share the load in solidarity," Keitel said.

Taxes as an alternative

Opposition and union leaders were quick to condemn Schaeuble's statements, with Social Democrat leader Sigmar Gabriel accusing Chancellor Angela Merkel's government of being out of touch with the country.

"At a time when we have many people who can enter the workforce only when they are better qualified, making savings here is not particularly smart," he told public broadcaster Deutschlandfunk on Sunday.

Meanwhile the union Sozialverband VdK said Keitel's suggestion "falls completely short."

"There are no population groups who have suffered greater losses of income than pensioners and the unemployed," said the organization's president Ulrike Mascher.

Klaus Zimmermann, president of the German Institute for Economic Research, told the regional Passauer Neuen Presse that savings should go hand-in-hand with tax increases.

Zimmermann named some primary targets: the tax-free status of bonuses paid to people who work Sundays, holidays and nights, tax deductions given to job commuters and subsidies paid to employers who shorten work hours in exchange for not cutting jobs - something Zimmermann called "no longer necessary."

"These add up to a total of 40 billion euros," the economist said.

acb/dpa/apn
Editor: Ben Knight