Government gives up aim of halving unemployment by the year 2000

After Chancellor Helmut Kohl declared in January 1998 that halving unemployment by the year 2000 might no longer be realistic, German trade unions reacted with strong criticism of the Government's policy.

In 1997 the average number of unemployed people in Germany was around 4.4 million, which marked a sharp increase of more than 400,000 on the previous year. The average rate of unemployment was 11.4% in 1997, compared with 10.4% in 1996. Although the German economy is expected to recover in 1998, most economic experts in Germany think that this will have only small effects on the labour market.

Against this background, Chancellor Helmut Kohl declared on 9 January 1998 that the Government's previous aim of halving unemployment by the year 2000 might no longer be realistic. In January 1996, the Federal Government together with leading representatives of trade unions and employers' associations signed the Alliance for employment and the securing of production locations (Bündnis für Arbeit und Standortsicherung) which defined the common goal of halving unemployment by 2000. Even though the initiative had already proved a failure by March 1996 after the Government announced several cuts in social benefits and a further deregulation of labour law (DE9702202F), the Government had always officially insisted on the goal of halving unemployment.

The Chancellor's declaration led to some sharp reactions from the trade unions. The president of the Confederation of German Trade Unions (Deutscher Gewerkschaftsbund, DGB), Dieter Schulte, for example, called Mr Kohl's statement a "political declaration of bankruptcy". Mr Schulte accused the current Government of conducting a policy "which never really fought unemployment". In addition, the president of the IG Metall metalworkers' union, Klaus Zwickel, called for a fundamental change to current policy. According to Mr Zwickel, there will be no halving of unemployment without a "massive redistribution of work" including a "massive working time reduction".

The unions also criticised the employers. In the unions' view, the employers have not been able to use the reduction in labour costs which resulted from the unions' moderate pay policy, to create new employment. For the coming collective bargaining rounds, the unions have announced higher wage demands to increase purchasing power of the employees (DE9711236F).

The president of the Confederation of German Employers' Associations (Bundesvereinigung der Deutschen Arbeitgeberverbänd, BDA), Dieter Hundt, said that in comparison with other countries the possibility to make profits in Germany was still unsatisfactory. Mr Hundt, therefore, sees the continuation of a moderate pay policy as a fundamental precondition for improving the labour market situation.