Chancellor's Party Gives Hearty Support to Reform Course
June 1, 2003
Chancellor Gerhard Schröder's economic reform package won broad support among party members at a remarkable party congress on Sunday, paving the way for a fight in Germany's parliament.
Around 90 percent of the 524 delegates voted in favor of his "Agenda 2010," more than the 70 to 80 percent expected by party officials.
"I am glad and happy," said Schröder, adding he "didn't expect or hope" for such a overwhelming show of support.
Before flying off to Evian, France for a meeting of the Group of Eight leaders Sunday evening, Schröder gave an impassioned speech before the delegates in Berlin.
As he has in other decisive moments of his six-year term as Germany's leader, Schröder threatened to resign should the delegates not approve the pacakge. The reforms call for massive welfare cuts and labor market reforms not seen in Germany for years.
"We need a change in mentality in this country," said Schröder.
This month, Germany's unemployed numbers hit the highest May levels since reunification in 1990. Last week, the International Monetary Fund warned Germany that it faces possible deflation and issued a report saying the country was on the edge of recession. Growth in Europe's largest economy is expected to hover around zero for 2003 and industry leaders are loudly calling for radical change that will overhaul an overly-generous welfare system and a restrictive labor market.
Future of Germany's postwar economic system
What's a stake is nothing less than the future of the social welfare system that has guided Germany to one of the world's economic powers in the decades following WWII. Many within Schröder's left-of-center social democratic party are hesitant to pass reforms that will upset their voter base.
Others view Schröder's "Agenda" as the first, small step in the right direction. One of the key aims is to reduce public spending. Germany currently spends 62 percent of its annual budget on the welfare state and debt - a number that will only increase the longer Germans are out of jobs.
To reduce spending, Schröder wants to meld unemployed benefits and welfare benefits into one monthly check. Reforms in Germany's health system are also necessary, and the "agenda" calls for an end to reimbursements for such things as tooth replacements or private accidents.
"We have to have the courage to risk a new [approach] and as a result, to bid farewell to that which we cherish, but is unfortunately too expensive," he told the congress.
Members of the SPD's left-wing, like former finance minister Oskar Lafontaine, favor tax increases to help finance the labor market benefits. They have warned their party leadership not to turn their backs on the unions, which have traditionally made up their voter base.
"The direction doesn't work," said Michael Sommer, the head of Germany's union association, the DGB, in a television interview. "We remain at odds in the questions and we'll make that obvious in the praliamentary process."
The SPD and their junior coalition partners, the Greens - who largely support the "Agenda" - are planning to push the package through parliament as soon as the Fall. The opposition Christian Democratic and Christian Social Union parties have until now, kept relatively quiet on "Agenda," saying they are ready to "negotiate."