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Germany: Solutions For Unemployment Differ Widely

Berlin, 30 September 1998 (RFE/RL) -- Germany's Gerhard Schroeder has not yet been installed as chancellor but already he is facing pressure over his future Government's economic policy.

Schroeder has committed himself to reducing the record four million unemployed --10 per cent of the population. This was the main element in the Social Democrats' winning election campaign. The goal is supported by both industrial and labor leaders but they differ widely on the measures accompanying the drive for more jobs.

The business leaders have called on Schroeder to pursue tax reform and other business-friendly policies, which, they argue, will open the way to more investment and more jobs..

The labor unions, which played a large part in Schroeder's victory, want him to maintain Germany's present system of costly social benefits which make hiring labor very expensive. The unions insist that Schroeder's government should even to roll back the few minor economic reforms introduced by the previous Christian Democratic government led by Helmut Kohl.

One of the three reforms targeted by the labor unions makes it easier for small businesses to dismiss staff. Another reduces sick pay benefits and the third cuts pensions. The unions claim that all three hurt lower wage earners.

But the head of the German Employers Federation, Dieter Hundt, has publicly warned Schroeder that any attempt to reverse these measures could threaten his goal of creating a roundtable of Business, Unions and Government to draw up measures to fight unemployment and other economic problems. Hundt said Schroeder was "stepping into dangerous waters" and warned that employers and industrialists may boycott the proposed roundtable.

Hundt's warning was echoed by the influential Federation of German Industry. Its President, Hans-Olaf Henkel, told nation-wide television that the roundtable "makes no sense" if the Government enters it with the precondition of reversing Kohl's economic reforms.

A top German labor leader, Dieter Schulte, president of the Federation of Labor, said in an interview yesterday that labor unions were "100 per cent in favor of the roundtable." Schulte, whose organization spent $4.8 million to support Schroeder's election campaign, said that only a united effort could fight unemployment and maintain German prosperity. But he insisted that whatever changes were introduced should not be at the expense of the German worker.

Schroeder is also facing demands by business and industry for a big cut in the maximum rate of tax paid by companies that can be as high as 53 per cent. The Social Democrats agree on the need for a tax cut but have told industry and business leaders that it will less than they demand.

Schroeder's SPD team is also girding itself for tough negotiations beginning tomorrow with prospective coalition partners, the left-leaning Green environmental party. Some groups within the Greens movement have revived radical proposals, including a steep rise in the cost of gasoline for private cars as well as a total ban on the use of nuclear energy and a German drive to dissolve the NATO military alliance.