Tag: Germany

Merkel looks at ways to tackle Germany’s east/west disparities

Merkel looks at ways to tackle Germany’s east/west disparities

Thomson Reuters BERLIN (Reuters) – German Chancellor Angela Merkel on Sunday said government subsidies were needed to address lingering disparities in the quality of life in the states of former Communist East Germany and West Germany 28 years after unification.
In a video webcast, Merkel said the government needed to look at ways to address the structural differences that would remain after a solidarity tax introduced in 1990 to support poorer eastern states runs out at the end of 2019. “We continually have to ask how we can balance systemic, structural differences between east and west in the area of research, in regard to the headquarters of large companies, and in the field of structural unemployment,” Merkel said.
In a statement releasing Merkel’s comments, her office said, “The federal government wants to use a programme of subsidies to help ensure equal living standards in all of Germany.”
Merkel said in the webcast that per capita gross domestic product in the former east was now around 73 percent of the level seen in the west, and tax revenues were also uneven.
Pensions were around 96 percent of the western level, but would not reach 100 percent until July 2024, she said.
Merkel’s conservatives and the centre-left Social Democrats, both worried by a rightward lurch in September’s national elections, have agreed to focus more on addressing structural disparities in the former east, and other structurally weak parts of Germany.
In the eastern state of Saxony, for instance, the AfD was the overall winner, even beating Merkel’s conservatives.
(Reporting by Andrea Shalal.
Editing by Jane Merriman)

Union chief upbeat on prospects for deal in German wage talks

Union chief upbeat on prospects for deal in German wage talks

Thomson Reuters BERLIN (Reuters) – The head of Germany’s public sector union said he was upbeat about reaching a compromise with employers in a third round of wage talks due to begin on Sunday, after a week of strikes by more than 150,000 union members.
Verdi leader Frank Bsirske told German newspaper Handelsblatt the two sides had been far apart in the previous two rounds of wage talks, but he was more optimistic going into the third round.
Verdi, with 2.3 million members, and the dbb assocation of civil servants, which represents 344,000 public servants, have been pressing for a pay raise of 6 percent for their next 12-month contract, or least 200 euros more a month.
Ulrich Silberbach, head of the dbb and the lead negotiator for the labour side, said the unions were ready to negotiate, but it was up to Seehofer to present a counter-offer. “After the long negotiations on forming a government, we can’t afford to also have long wage conflicts,” he said in a statement.
Verdi’s Bsirske said surging German tax revenues meant the pay deal should definitely be higher than one struck two years ago, when workers got an initial 2.4 percent increase, followed by a 2.35 percent increase. “Last time we had a 2 before the comma.
Inflation edged up to 1.5 percent in March.
Germany, Europe’s biggest economy, is in solid shape, with buoyant tax revenues and a record budget surplus.
Falling unemployment, inflation-busting pay rises and low borrowing costs are fuelling a consumer-led upswing.

Bavaria’s conservatives are embracing identity politics to fend off the far right

Bavaria’s conservatives are embracing identity politics to fend off the far right

THE Rittbitten is as characteristic of Erlstätt, a village in southern Bavaria, as the onion dome of its church and the Alpine peaks on its horizon.
Each year villagers gather at the Gasthaus Fliegl restaurant, where, accompanied by a brass band in lederhosen, the religious Saint George Society invites locals to join an Easter Monday horseback ride.
Heimat means home, but also tradition, belonging and place.
In contrast, Bavaria is rich, has managed migrant inflows more smoothly than other states and has its own deep-rooted conservative party: Mr Söder’s Christian Social Union (CSU).
Horst Seehofer, the then party leader, blamed Angela Merkel and her liberal refugee policies, even though the CSU, which took a tougher line on migrants, suffered a worse fall than Mrs Merkel’s party, the Christian Democrats (CDU).
The AfD could even come second.
So the CSU is concentrating on the law-and-order issues that motivate right-wing voters.
Most contentiously, on March 16th Mr Seehofer opined that “Islam is not part of Germany”.
Political correctness is no Heimat,” Mr Dobrindt said on March 25th.
“Islam has become part of Germany,” countered the chancellor in the Bundestag.

Economic boom drives German unemployment to historic lows

Economic boom drives German unemployment to historic lows

The number of people without work in Germany fell by another 25,000 people in February, compared with the previous month, driving down the nominal unemployment rate from 5.8 percent to 5.7 percent.
According to the latest figures released by the German Federal Labor Agency (BA) on Wednesday, about 2.55 million people were registered as jobless, which was 216,000 fewer than in the same month a year ago.
Read more: German jobs market hit record in 2017 BA chief Detlef Scheele said that “good labor market developments” had continued in February, with companies increasing their permanent job offers and continuing to look for additional staff.
Read more: Lufthansa to hire 8,000 workers in 2018 In figures adjusted for seasonal swings, Europe’s biggest economy added 22,000 new jobs in February, with the unemployment rate holding steady at 5.4 percent — the lowest since German reunification in 1990.
Read more: Jobs renaissance in Europe?
After a decade of wage restraint on the part of German labor unions, they are now seeking to capitalize on the jobs boom by pushing for huge salary increases in wage talks with employers.
White-collar union Verdi is currently seeking a pay rise of 6 percent for the country’s public sector employees.
Growing unease But in February, formerly buoyant business and investor confidence surveys deteriorated more than expected as a stronger euro clouded the outlook of exporters and investor morale also fell.
GfK’s consumer sentiment indicator, which is based on a survey of around 2,000 Germans, slipped to 10.8 points going into March from 11.0 in February, which was the highest level since 2001. “The political turbulence surrounding the formation of a stable, viable government in Berlin may have unsettled consumers,” Buerkl said, adding however that consumer optimism among Germans “remains high.”

CharlemagneWhy Germany’s new government is not about to go soft on the euro

CharlemagneWhy Germany’s new government is not about to go soft on the euro

It might also serve as a warning for foreigners who expect the SPD to inject a dash of vigour into Germany’s European policy.
The red lines outsiders had come to expect from Germany on matters like risk-sharing in the euro zone seemed conspicuously absent.
On the euro zone, Mr Macron’s dreams of whopping budgets and an all-powerful finance minister have already been shelved, at least for now.
Instead difficult, grinding negotiations lie ahead on matters like reforming the euro zone’s bail-out fund and creating automatic mechanisms to restructure the debt of troubled countries.
Even completing the banking union, a project that EU officials once thought was straightforward, looks tricky.
Nor did the SPD’s bigwigs see it as a way to mobilise support for the coalition deal they were pressing on their members.
Put this to EU or German officials, and they say they are used to Italian caprice.
Investors seem to agree; Italian bond yields shrugged after the election.
Italy’s banks are weak and its debt burdensome.
A second is that Italy will be excluded from Franco-German talks.

Many Volkswagen workers will get 45 vacation days

Many Volkswagen workers will get 45 vacation days

It’s a good time to be a German autoworker.
About 120,000 unionized Volkswagen (VLKAY) workers just agreed to a deal that gives them a significant pay bump and, in some cases, six extra days off.
Volkswagen said the workers will get a 4.3% pay rise starting in May, and from 2019 an extra 2.3% bonus and more pension benefits.
Night shift workers, and those caring for children and elderly relatives, can swap the new bonus for six extra days off.
If they do, they’ll be entitled to about 45 paid days off each year, including public holidays.
German workers are taking advantage of low unemployment and strong economic growth to flex their muscles at the negotiating table.
Economists say the pay deals should be positive for growth, because they will encourage Germans to spend more.
said Florian Hense, an economist at Berenberg bank.
Other German manufacturing workers can expect healthy pay deals this year, but not everyone will benefit.
And inflation in the eurozone is not expected to get close to the European Central Bank’s target of just under 2% for at least the next two years.

CharlemagneGermany is not about to reinvigorate the EU

CharlemagneGermany is not about to reinvigorate the EU

FOR so long the last man standing in Europe, Germany has suddenly become its Sleeping Beauty.
In 2011 Radek Sikorski, then Polish foreign minister, declared himself less fearful of German power than German inaction.
When France elected an avowedly reformist president in May, Germany seemed to have found the partner it had long claimed to seek.
But Mrs Merkel cuts a diminished figure these days.
Leading her Christian Democrats (CDU) to their worst election result since 1949 was the first wound.
The second came when Christian Lindner, pugnacious leader of the liberal Free Democrats (FDP), blew up her bid to form a “Jamaica” coalition with his party and the Greens.
Soon afterwards the German agriculture minister went rogue in Brussels, voting against a European Union weedkiller ban without first checking with his colleagues in Berlin.
Now Mrs Merkel is trying to rebuild the “grand coalition” of the past four years with the SPD, and some hope Mr Schulz’s party could inject it with some pro-European vim.
As a former president of the European Parliament, Mr Schulz is well suited to place the EU at the heart of his coalition talks with the CDU, and Mrs Merkel’s lack of alternatives hands him tremendous leverage.
Mrs Merkel’s officials bristle at suggestions that Germany has done nothing: look how far the chancellor has moved on bail-outs and risk-sharing in recent years.

Keine PanikReports of the death of German stability are greatly exaggerated

Keine PanikReports of the death of German stability are greatly exaggerated

Yet it really—really—is not Germany’s “biggest crisis since 1945”.
Britain could well use a problem like that.
Though a serious headache for Mrs Merkel, the deadlock in Berlin is a sign of Germany’s representative democracy working as it should.
The particular circumstances of the current impasse further belie the idea of a democracy in crisis.
And while the CDU/CSU and the Greens insist (credibly) that a deal with the FDP was possible and pooh-pooh the latter’s claim to have “protected Germany from chaotic government”, the flounce spoke of personality clashes and lacking trust between the parties after four weeks of talks.
A minority government, though not Mrs Merkel’s preferred option, would be relatively secure once in place: a minority chancellor cannot be easily dismissed by the Bundestag, which cannot dissolve itself without the chancellor’s approval.
German observers were declaring her chancellorship’s twilight long before Sunday night.
Recently the Netherlands, Spain and Belgium have gone 7, 10 and 18 months respectively without government, in each case enjoying above-trend growth throughout the period in question.
Reforms to the currency union, common solutions to the migration crisis and Brexit will all be on the agenda at next month’s summit in Brussels, for example, and Donald Tusk wants a deal on further euro zone integration by next June.
The current uncertainty may last a while.

Key Institutes: Germany Continues to Enjoy Robust Upswing

Key Institutes: Germany Continues to Enjoy Robust Upswing

BERLIN – Germany’s economy is enjoying a robust upswing and some segments of the economy can’t keep up with growing demand, according to the latest report of leading German think tanks, which calls on the next government to cut labor costs and taxes amid high budget surpluses.
They forecast growth of 1.9% in 2017, compared with April’s prediction of 1.5% and after 1.9% growth posted in 2016. “Growth was driven by exports, which gained momentum in the first half of the year. Domestic demand, however, likewise remained a driving force behind the expansion,” said Stefan Kooths, Head of the Forecasting Center at the Kiel Institute for the World Economy.
Chancellor Angela Merkel’s conservatives, the pro-business Free Democrats and the environmentalist Greens are expected to take up coalition talks in the coming weeks following Sunday’s vote.
For 2018, they forecast a surplus of 1.1% of GDP that will increase to 1.2% in 2019.
Thanks to the strong economy, Germany’s unemployment rate will fall to 5.7% this year, from 6.1% in 2016, to 5.5% in 2018 and to 5.2% in 2019, they forecast.
The institutes expect it to decline to 7.8% of GDP this year, after 8.3% in 2016, before rising slightly to 7.9% in both 2018 and 2019.
Germany has been under fire for its huge current account and trade surpluses for years, but the new U.S. administration under President Donald Trump has stepped up criticism, accusing Europe’s largest economy along with China of unfairly benefiting from their weak currencies at America’s expense.

German inequality may have fueled far-right surge

German inequality may have fueled far-right surge

The anti-immigrant AfD party took 21% of the vote in the east of the country, where industrial decline has left people feeling insecure.
Speaking on Sunday night, Merkel said she wanted to win back AfD voters and would try to address their concerns about the economy and immigration.
The number of Germans at risk of slipping into poverty is the highest since the country was reunited in 1990, and that risk is greatest in what used to be East Germany.
But the benefits have not been shared equally.
The richest 10% of households saw their real incomes jump by 27% between 1991 and 2014, according to the German Institute for Economic Research. Middle class incomes increased by 9% over the same period, while households at the bottom saw their incomes drop by 8%.
Wages paid to workers increased by 5% between 2000 and 2016.
Grabka said that another key factor is an increasing number of jobs that don’t pay well.