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Business

Racing the Clock for Labor Reform

Big business and politics like the new labor market reforms proposed by the Hartz commission. Now Chancellor Schröder wants to see if voters do as well.

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Let the people decide

Eager to appear reform-ready in time for September's elections, Chancellor Gerhard Schröder said he wants to make radical changes in Germany's troubled labor market an imminent reality.

With close to 4 million unemployed, pressure is on Schröder's social democrat and Green party coalition government to act quickly. The opposition Christian Democratic Union and Christian Social Union have already made the high unemployment and Germany's slumping economy a campaign topic. Voters seem to have responded positively, giving the CDU/CSU a solid lead in polls.

Now Schröder wants to reverse the flow. The commission he set up four months ago to look into the country's cluttered and bloated employment agencies has begun leaking out its list of measures, two months before their official release date.

Among other things, the commission headed by Volkswagen director Peter Hartz, recommends cuts in welfare and unemployment benefits after one year and the establishment of personal service agencies to streamline the job and aid search for the unemployed. Unemployed will be outfitted with chip cards that they can hand over to employment agencies to speed up the process.

Hartz said the recommendations will halve the list of unemployed by 2005 and save billions in state-sponsored aid. They have found a welcome reception among a business and political establishment that knows reform is needed.

Schröder is hoping voters will realize that as well and announced over the weekend that the reforms could come into effect before the Sept. 22 election. The final report is due Aug. 16.

"The plan goes completely in the right direction," he wrote in the Social Democratic Party organ "Vorwärts". He emphasized that it had to be adapted completely so that "not everyone picks out whatever matches up with their interests or demands."

Wishful thinking

The latter might be wishful thinking. The massive trade union Ver.di has already voiced displeasure over aspects of the proposals. Union head Frank Bsirske told Reuters on Monday that his organization didn't believe in the dramatic reduction of benefits and wages.

Chancellor candidate Edmund Stoiber, of the CDU/CSU, accused Schröder of trying to foist quick-fix promises onto the populace in an effort to cover up four years of incompetence in the labor market.

Even Hartz, Schröder's friend, has come out against weaving the proposals into the campaign battle.

""Our work is nonpartisan, and is focused on practical solutions," Hartz told Der Spiegel magazine. "The concept will be presented so that it can be carried out after the elections – no matter who is in power."

Empty promises, quick fixes

When he became Chancellor, Schröder promised to reduce unemployment down to 3.5 million. His administration's reputation has suffered for not meeting that very moderate goal. Revelations earlier this year that Germany's employment offices were inflating job placement figures caused a stir and led to the Hartz commission's creation.


Schröder would love to take the ambitious promises the commission has made and test them out on the populace. Figures such as a 50 percent reduction in unemployment and 27 billion euro in savings are guaranteed to impress voters, but not as well as concrete reforms would.

Whether he can get them out fast enough remains to be seen.