The Hindu : SDP has nothing much to cheer about?

Online edition of India's National Newspaper
Tuesday, May 27, 2003

International

International

SDP has nothing much to cheer about?

By Batuk Gathani

Brussels May 26. T he Social Democratic Party (SDP), led by the Chancellor, Gerhard Schroeder, celebrated its 140th anniversary recently in the backdrop of its inability to introduce reforms to kick-start the economy.

The unemployment rate is hovering above the 10 per cent mark — almost the highest point in the post-war Germany. Compounding the crisis, both the domestic and foreign investment flows are depressing. More companies are going bankrupt and prominent labour intensive manufacturing companies are looking at ways and means to shift their manufacturing base to Eastern Europe or Asia. The manufacturing and labour costs are the highest in the world as a skilled worker is costing $45 an hour to employers. Hence, slowly but surely Germany is fast losing its traditional competitive edge in the global market place.

The Social Democratic leadership is in a deep quandary and faces a daunting political dilemma. The only silver lining for it is that the Opposition Christian Democrats are no better with no dynamic economic agenda. It remains to be seen what strategy Mr. Schroeder adopts to initiate economic, labour and structural reforms to reinvigorate the economy.

The leadership has already hinted at initiating labour reforms to ease archaic and often crippling labour laws, to pave way for more flexible `hire and fire' policy. The authorities are also proposing to cut down on social welfare allowances for the unemployed. The powerful German trade unions are set for a showdown with the centre-left coalition Government of the SDP and the Greens or environmentalists. The situation is no different in Italy where powerful trade unions also are opposed to the far-reaching pension reforms proposed by the centre-right coalition Government of the Prime Minister, Silvio Berlusconi.

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