German Economic Report Angers Unions, but Cheers Employers
July 22, 1999 - 0:0
BONN The German Economics Minister Werner Mueller on Tuesday called for a radical overhaul of the social welfare system, drawing the ire of labor unions but winning praise from employers. In his 1999 economic report, Mueller called for a smaller role for the state and increased personal responsibility in the economy and society as a whole. "The welfare state must rethink its role, its aims and the instruments at its disposal," the report said.
"State aid must concentrate on the really needy and people must be encouraged to make their own provisions." Mueller's ideas tie in with a joint manifesto for tough action on public spending across Europe, launched by German Chancellor Gerhard Schroeder and his British counterpart Tony Blair at the beginning of June. That manifesto urged center-left parties to reform the welfare state, adopt flexible labour markets and assume an overtly pro-business stance in formulating their policy.
Observers interpreted the manifesto as an end to traditional left-wing politics. Mueller argued that if welfare systems are to continue to exist they must be financeable and not place a heavy burden on future generations as is currently the case. "But living from the future is not sustainable," Mueller said. "and it is also unsocial." It is similarly unsocial if any additional remuneration from progress in productivity is immediately routed away from employees' pockets and into state coffers via higher taxes and other levies, Mueller said.
Between 1982 and 1999, per capita productivity rose by an average 35 percent in Western Germany, while net average wages increased by only 5.8 percent. "People's wallets must get thicker," Mueller said, adding his aim is to reduce the share of the public sector in gross national product to 40 percent, primarily by cutting public subsidies. Mueller predicted that the German economy would grow by just under two percent in the current year and by "substantially more" than two percent in 2000. His wider aims included the fastest possible reduction in unemployment, measures to make the economy more flexible and innovative and the improvement of training opportunities.
There would increased support for new technologies and renewable sources of energy, and economic policy would tailored more to the needs of small and medium-sized companies, the minister said. Mueller also said wages should be related to productivity while also taking into account differences in qualifications, region and the labor market in general. White collar workers' union, the dag, immediately rejected the comments as "wholly displaced" and the banking, insurance and services union, HBV, called Mueller's report "dangerously out of touch with reality." (AFP)
"State aid must concentrate on the really needy and people must be encouraged to make their own provisions." Mueller's ideas tie in with a joint manifesto for tough action on public spending across Europe, launched by German Chancellor Gerhard Schroeder and his British counterpart Tony Blair at the beginning of June. That manifesto urged center-left parties to reform the welfare state, adopt flexible labour markets and assume an overtly pro-business stance in formulating their policy.
Observers interpreted the manifesto as an end to traditional left-wing politics. Mueller argued that if welfare systems are to continue to exist they must be financeable and not place a heavy burden on future generations as is currently the case. "But living from the future is not sustainable," Mueller said. "and it is also unsocial." It is similarly unsocial if any additional remuneration from progress in productivity is immediately routed away from employees' pockets and into state coffers via higher taxes and other levies, Mueller said.
Between 1982 and 1999, per capita productivity rose by an average 35 percent in Western Germany, while net average wages increased by only 5.8 percent. "People's wallets must get thicker," Mueller said, adding his aim is to reduce the share of the public sector in gross national product to 40 percent, primarily by cutting public subsidies. Mueller predicted that the German economy would grow by just under two percent in the current year and by "substantially more" than two percent in 2000. His wider aims included the fastest possible reduction in unemployment, measures to make the economy more flexible and innovative and the improvement of training opportunities.
There would increased support for new technologies and renewable sources of energy, and economic policy would tailored more to the needs of small and medium-sized companies, the minister said. Mueller also said wages should be related to productivity while also taking into account differences in qualifications, region and the labor market in general. White collar workers' union, the dag, immediately rejected the comments as "wholly displaced" and the banking, insurance and services union, HBV, called Mueller's report "dangerously out of touch with reality." (AFP)