| Rising unemployment in Germany forces Gerhard Schröder to take drastic measures German Chancellor Gerhard Schröder is approaching the upcoming G8 summit in Evian in three weeks with very unpleasant results in the development of the national economy. As you know, for the first time in the last decade, the agenda of the meeting of leaders of industrialized powers includes a discussion of their own economic policies . In the report presented to the summit by the “shadow G8” (a group of experts from the G8 countries, uniting former head of the US Federal Reserve Paul Volcker and former Secretary of State Henry Kissinger, former WTO Director General and ex-Italian Foreign Minister Renato Ruggiero, Russians Sergei Karaganov and Boris Fedorov and others) say that it is Germany, the “former locomotive” of the eurozone, that is slowing down the development of the entire region. German GDP growth in 2001 was 0.6%, in 2002 it slowed down to 0.2%, and this year the IMF predicts 0.5% growth.
The Shadow Eight notes that there is no shortage of proposals on how to reform Europe's economic space, but "the question is which of the countless proposals to follow, how to set priorities, and most importantly, to understand how the G8 and encouragement (or pressure) from the international community can help overcome internal resistance to necessary changes” (full text of the report - on the website www.globalaffairs.ru) . For their part, experts put first place “a radical reform of the labor market both at the level of the European Union and in individual countries, aimed at increasing labor mobility and, consequently, the productivity of the economy as a whole.”
Unemployment is perhaps the key problem of today's Germany, and the situation on the German labor market is becoming increasingly tense. Yesterday, the Federal Labor Office in Nuremberg announced a new sad record, which can be credited to the Schröder government’s “treasury”: in April, 4.5 million unemployed were officially registered in Germany. This figure has not risen this high since 1990, when the former VEBs, East German “people's enterprises,” were closed one after another. And compared to April last year, when the unemployment rate was 9.7%, the German “army of the unemployed” has grown by almost half a million regular clients of the labor exchange. This means that today almost 11% of the working population in Germany cannot find a job they like.
In itself, the high “average German” figure of 11% does not reflect the severity of the situation in the new states, where the unemployment rate reaches almost 20%. The German East spoils the federal government's unemployment statistics year after year. In last year's parliamentary elections, Social Democrat Gerhard Schröder almost paid for this indicator with his chancellorship. His predecessor, Christian Democrat Helmut Kohl, settled scores with statistics in his own way. Since the early 90s, at the dawn of German reunification, his government introduced the concept of a “second labor market” (in German it was the abbreviation ABM). It was formed due to government subsidies for job creation. Chancellor Schröder declared war on this phenomenon, contrary to the market economy, which he inherited from his predecessor, at the beginning of his first term in office in 1998. Little by little, labor exchanges began to reduce ABM rates.
Now it looks like everything will return to normal. As it became known yesterday, the federal “super minister” Wolfgang Klement, who is in charge of economic and labor issues in the Schröder government, as well as Manfred Stolpe (he is the Minister of Transport and, incidentally, Schröder’s main confidant for the new federal states) are currently busy creating approximately 100 thousand workers places subsidized by the government under the ABM program. These jobs should appear in “structurally weak” regions. Stolpe intends to present this “new” model for patching up statistical holes tomorrow to the SPD working group specially created for this purpose.
The new measure was declared (as it was already under Kolya) “temporary”, limited to two years. It will be called upon, as its initiators say, to “return 100 thousand people from social assistance and unemployment assistance” during this time. The project will cost the government (and, of course, taxpayers) a billion euros - and they will be used to currently increase the “second labor market”.
Local economists are not too optimistic in their assessment of the current “temporary” solutions to increase employment of able-bodied Germans. Expert of the Federal Union of German Industry Reinhard Kudiss believes that by the beginning of 2004 the number of unemployed in Germany will rise to 5 million people. A similar scenario is considered realistic by the independent Institute for Economic Research in East German Halle. “The danger cannot be completely ruled out that we will break the five million mark on the labor market in the winter of 2004,” said employment expert Herbert Buscher.
Meanwhile, there is no certainty that the Gerhard Schröder administration will even be able to implement its “temporary” project. Even if he is not criticized by the chancellor’s “market-oriented” colleagues during the discussions at Evian (after all, theory is theory, and other measures to stimulate the economy still need to be invented), Schröder will have to convince his own taxpayers and the Ministry of Finance of the advisability of such spending. Given the huge budget deficit, this does not look like an easy task. Yuri ShPAKOV, Berlin, Andrey DENISOV |
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