SPD and Greens Take Stock of Reforms

Germany’s long process of structural and social welfare reforms is far from finished, Chancellor Gerhard Schröder told members of his cabinet at the close of a two-day meeting near Berlin on Saturday. The cabinet-level officials of the Social Democratic and Greens coalition government met at Neuhardenberg Palace to discuss the achievements of the first half of the administration and to solidify the political goals needed to win the next election in 2006.

"We’re ready for a fight during the second half of this legislative period," Schröder said. "And we’re going into this with the goal of winning a third."

Schröder said the reforms passed so far by his government are unparalleled in Europe, and they are already having an effect. In recent days, economic forecasts have been positively upgraded and, he said, the coalition government has shown an impressive level of determination to push through the difficult reforms, which are intended to jumpstart the lukewarm economy. With the "Agenda 2010" package, Schröder said, the most comprehensive modernization of Germany’s social security system ever undertaken has been introduced.

Reforms not over until they’re implemented

"It’s important to me that it remains clear to everyone that the reform process hasn’t ended yet," Schröder said. "The reform work can only be seen as successful when it the implementation phase has been successfully completed. And now our political leadership needs to concentrate on the implementation of these wide-ranging reform agenda with as little conflict as possible."

At the meeting, cabinet officials intensively discussed the law passed Friday that will reorganize the supervision of the country’s more than 2 million long-term unemployed starting in January 2005. Schröder said the government must ramp up its placement programs for people who have fallen out of the workforce.

Schröder said that although it wouldn’t be possible to place all long-term unemployed people, the country needs better placement programs to bring people back into the workforce and help give them restore some of the dignity they’ve lost by having to accept government handouts.

But it’s unlikely the federal government will implement new programs itself. Economics and Labor Minister Wolfgang Clement said the government would not create any special programs to finance the long-term unemployed. Instead, communities and charity organizations should be helping create and find jobs for the unemployed, partially using money that will have been saved through the reforms, he said.

Extra burdens for eastern states

German cities and communities, however, have questioned whether the cuts will have any tangible effect on the labor market – especially in the eastern states. With an unemployment rate of 25 percent in some parts of eastern Germany, it will be difficult to find jobs for everyone, critics have lamented, questioning the sense of the reforms.

The chancellor said he is planning to meet with the eastern German state premiers who voted against the legislation that would dramatically reduce social welfare benefits for long-term unemployed in the Bundesrat, Germany’s upper legislative chamber, on Friday.

"I don’t want to have an ‘East-West’ discussion on this issue," Schröder said. Instead, he said he is calling on the eastern German premiers to make the best out of the situation.

Better daycare so moms can work

Schröder also called on local communities to improve daycare programs for children under three in order to make it easier for young women to build a career and family. Family Minister Renate Schmidt is expected to next week introduce draft legislation that would require local communities to provide all-day care, based on need, for children under three years of age. The plan calls for the creation of 230,000 new care slots for the toddlers in the western German states; eastern German states would not be included in the bill because they have already reached an acceptable level, Schmidt said. The plan calls for money saved by communities through the merger of unemployment and welfare benefits to be funneled to the daycare programs to the tune of €1.5 billion.

Schröder’s cabinet is next scheduled to meet during the summer break from parliament in Bonn, where reforms to the national public health care system will be discussed.