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Europe

German Press Review: Pensions Go under the Knife

German papers on Tuesday dissected Chancellor Gerhard Schröder’s decision not to extend a cost-of-living increase to pensioners as part of the government’s drastic reform measures to turn the economy around.

The Düsseldorf-based Westdeutsche Zeitung seemed Pavlovian in its response to the changes to Germany's pension system -- issuing a cry of outrage. "Pensioners not only have to cope with a freeze in the increase of payments to reflect inflation, but they have to pay higher insurance fees on nursing care." Saxony Premier Georg Milbrandt complained: "The game rules are twisted continually to hide the reality." He’s right, the paper’s editors concluded, adding that it "would be better to change the rules once and for all and to abide by them."

Potsdam’s Märkische Allgemeine noted that it has been obvious for over 20 years now that the collapse of Germany's state pension system was inevitable and now it's the turn of the coalition government -- led by the Social Democrats and their junior partners, the Greens -- to hand out the bitter pill of pension reform. "The reasons were obvious, fewer and fewer young people are financing the retirement of more and more older people," the paper opined. And as hard as the reforms may seem, the editors concluded, "what's really worrying is that they will only bring two years relief."

The national Frankfurter Allgemeine Zeitung said the losers of the red government’s reforms are the nation’s 20 million pensioners. "This government is clearly avoiding shifting the retirement age to 67 as suggested by both Rürup and Herzog committees," it wrote. Now, the matter will be taken up for reconsideration as late as 2010. "This is a catastrophic blunder ... For less well-off pensioners these changes will be difficult to bear, and for the rest they will still be uncomfortable." But what is clear is that while the number of losers will be great, the number of winners will be small, the paper concluded.

The Berliner Kurier opined that the loud outcry of the pensioners against the cuts is "not surprising considering they will have less money in their pockets." But social welfare advocates have to recognize that "where no money exists no money can be paid out." The paper warned that this is only the beginning -- the weekend’s triage has only delayed what is inevitable: an increase in pension contributions. The paper concluded that it would be better to address the "bitter truth about pensions now rather than tell endless lies."

Finally, the Lübecker Nachrichten commented that, while the pension changes may seem "unjust, increasing payments at the price of higher labor costs would end up being much more expensive for everyone." Germany's high social security contributions and other non-wage labor costs, the paper’s editors noted, are a crucial reason why employers are moving to countries where the labor market is cheaper. "With its Agenda 2010 (reform plan), the government wants to halt this fatal development," the paper said in defense of the Schröder cabinet.