Preparing Germany for the future with Agenda 2010

In a speech given at a May Day rally organized by the German Trade Union Federation in Neu-Anspach, Hesse Chancellor Gerhard Schröder said this traditional observance was being held against the backdrop of a difficult political and economic situation in the world. Schröder thanked the trade unions for their support of a policy supporting the resolution of international conflicts by peaceful means. He said this policy expressed what is jointly wanted in Europe for Europe, adding that Europe is to be a place of lasting peace and prosperity for its people. Not just a market but also a place in which the employed can be certain that the societies in Europe, including Germany, will themselves be the determinants of involvement in ownership and decision-making.

Preparing Germany for the future with Agenda 2010

He went on to say that on May Day trade unionists needed to ask themselves what the idea of a common Europe means for the largest and economically most influential country in Europe, i.e. for Germany. Agenda 2010 has a single objective, Schröder noted, that of making the country better able to cope with the enormous changes and challenges it faces today. Agenda 2010 is aimed at preparing Germany for the fact that the changes that are taking place in the economic base are going to have to be followed by policy changes. It is no longer enough to cling to past achievements, Schröder said. The average age of the German population is increasing, meaning that there are fewer young people in our society. There has been a refusal to talk about this fact and its consequences for the social security system for long enough and there is a need now to finally draw the appropriate conclusions.

Schröder said his government had started to draw these conclusions. If there are fewer and fewer people paying into the system while the number of people receiving payments out of the system continues to grow, then this is bound to have its effects on whether or not we will still be able to afford everything we used to be able to afford. People need to be able to keep a larger amount of their gross earnings as net pay and this is the reason for the government's reforms.

A sensible balance between budget consolidation and economic stimulus measures

Schröder said there are three things connected with Agenda 2010. First of all a sensible balance between budget consolidation and economic stimulus measures. He said he was aware of trade union demands for higher levels of public debt to fund economic stimulus measures. But a policy involving additional public borrowing would not be fair to future generations, since it would be done at their expense. "We must not eat up today what our children and grandchildren will need to live on tomorrow," Schröder said, adding that his government's economic policy is based on this consideration.

Secondly, there is a need to lower non-wage labor costs to create more employment. There is no intention to take accumulated pension rights away from anyone and there will be protection for everyone who pays contributions into the social security system. However, it makes sense to merge unemployment benefits and welfare benefits. There are about a million people on welfare who are capable of working. We need to be able to find employment for these people and we need to see to it that older employees are given a chance to remain employed and not to be relegated to unemployed status with the help of the government. This, too, will be achieved with the announced reform measures.

Thirdly, the health care system needs to be put in order. Schröder called upon all those who have an interest in not having health care contributions rise to astronomic levels to support these reform efforts. The government will work on the principle that everyone will get what they need in medical terms to restore them to health, independent of their income. But in this system, too, there will be a need to lower costs and this both on the side of those who provide medical services as well as on the side of those who receive them.

Training a key task for the future

Schröder noted that those who want to prepare Germany for the future will have to invest more in education and training, adding that this is the key task that lies ahead of us. Since 1998 the federal government has increased its budget for education and training by more than 20 percent. However, government funding alone will not be enough, Schröder indicated, appealing to the public and in particular to companies to do more to provide additional training opportunities. He said there were about 140,000 too few training opportunities in Germany this year, adding that the dual system of practical and classroom training is widely recognized around the world. He noted that without an increase in training Germany would be sawing off the limb we will all be sitting on tomorrow. In this matter industry cannot simply rely on the government. It is a fundamental obligation of companies and company owners to provide a training opportunity for every young person who seeks one. If a sensible response to the government's appeals to industry is not forthcoming in the near future then the government will be forced to take legislative action, Schröder said, adding that he hopes industry will come to understand that the creation of training opportunities is a duty for everyone concerned and not something that can be dumped on the doorstep of government.

Schröder said he had noted the protests voiced against the government's reform proposals, but reaffirmed his firm conviction that Agenda 2010 is the road Germany will have to take to be able to preserve the substance of the welfare state on a new basis under radically changed economic and national conditions. He concluded his speech in Neu-Anspach by saying that he would continue to express this view before this and other audiences.