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03/16/2010

Two months ahead of a key state election, Germany's center-left Social Democratic Party has announced it is moving away from unpopular labor market reforms it introduced while in office, in a bid to reverse its fortunes.

The Hartz IV reforms were introduced during the administration of former Chancellor Gerhard Schröder, who was in office from 1998 to 2005, and drastically cut benefits for the long-term unemployed. The reforms, which are unpopular both within the SPD and among the general population, are widely regarded as one of the key factors behind the SPD's decline in recent years and its poor performance in the 2009 national election, where it achieved its lowest ever post-war result. Since then, the party has been engaged in a process of soul-searching in a bid to re-orientate itself and to win back lost supporters.

"The SPD would be well advised to differentiate between what was right in the original reforms and what needs to be changed in order to stop the downward trend," said SPD leader Sigmar Gabriel at a press conference Monday where he presented the party's proposals for correcting the reforms.

More a Tweak Than a Radical Break

The new proposals are more a tweaking of the original reforms than a radical break with the past. The so-called Hartz IV benefit system for the long-term unemployed was introduced in 2004. Prior to the introduction, unemployed Germans could claim between 60 and 67 percent of the last net income they received for between one to three years. After Hartz IV was introduced, however, they could only claim the full unemployment beneft for one year -- longer if they were over 55. Under Hartz IV the long-term unemployed received much lower payouts. The idea was to boost the economy by encouraging jobless people to find work as well as reducing the cost of Germany's welfare system. Since its introduction however, the reform has also become synonymous with poverty and social decline.

This week the SPD is proposing that the full unemployment benefit be extended by one year if the recipient is taking part in vocational training. For those on lower, long-term welfare benefits -- of the kind that are claimed after a year -- the party will also look at increasing extra payments based on how many years the recipient has worked. The idea is that people who have been working, and therefore paying into the social security system, for longer will be eligible for a higher unemployment benefit for longer than those who have worked for fewer years.

More Than a Hint of Electioneering to Proposals

The SPD leadership is also proposing that welfare recipients' assets not be taken into account when determining their eligibility for unemployment benefits. Under current rules of the Hartz IV reforms, the long-term unemployed who have savings and other assets above a certain value must use those for their living expenses before they are eligible for welfare payments.

The changes to the Hartz IV policies are currently only suggestions, and the SPD's new position will only be officially decided at its party congress in September. The timing of the announcement is no coincidence, however. The SPD is hoping to win back disenchanted supporters ahead of key state elections in May in North Rhine-Westphalia, Germany's most populous state. North Rhine-Westphalia had traditionally been an SPD stronghold, but the party lost control of the state to the conservative Christian Democrats in 2005 -- partly due to the unpopularity of the recently introduced Hartz IV reforms.

On Tuesday, commentators in Germany's main newspapers assess the SPD's chances of reversing their fortunes by backpedalling on Hartz IV.

The center-left Süddeutsche Zeitung writes:

"Those who had hoped -- or feared -- that the SPD would, after their defeat in the general election, throw the principles of the Schröder era in the trash and move vigorously to the left, were wrong. The Social Democrats are remaining faithful to their principles in their labor and social policies. One of those principles is that they want to encourage people to seek, and to stay, in employment. The reform of Hartz IV is not a break with the basic ideas of the Schröder policies. At most, it is a moderate correction, which in some respects -- for example, in regard to rules on recipient's assets -- comes much too late."

"The proposals will not be enough for the Social Democrats to recover their lost supporters and their reputation overnight. At the same time, the SPD will not lose the respect and support of those who still see it as the workers' party, rather than a political party for the unemployed. Once again, the SPD under Gabriel has shown that it can resist temptation."

The conservative Die Welt writes:

"The Hartz reforms have not only changed the world of the unemployed -- indirectly they also affect a large proportion of workers. The fear of becoming downwardly mobile as a result of losing one's job is greater today than in the past -- and that affects the middle classes too. Temporary work, short-term contracts and low wages have also introduced significant competitive pressure in terms of incomes."

"One of the stated goals of the Schröder administration was that the Hartz reforms should make the labor market more flexible. That was the reason that more jobs were created than ever before during recent boom years. Temporary or part-time jobs have often proved a bridge from unemployment to regular employment. And there is no doubt that, without those structural reforms, the German labor market would not have survived the economic crisis as well as it has. With its new direction, the SPD is showing that it does not care about the chances of the long-term unemployed."

The left-leaning Die Tageszeitung writes:

"Up until now, the Social Democrats have been struggling with the legacy of the Schröder-era reforms. As a result the Social Democrats have been scaring away voters, wearing out party leaders, struggling with the party's base and they have lost part of their identity. Now, in 2010, current leader Sigmar Gabriel wants to finally close the Schröder chapter. But despite all the fixes that are being proposed, this is not a true fresh start. And nothing less would be enough."

"Those people directly affected by the SPD's labor market policies have long since abandoned the party. About 2 million former SPD voters did not bother voting in the September 2009 parliamentary elections. It will be difficult to regain their confidence. People on welfare no longer look to the SPD for social support. Instead, they turn to charities or private initiatives. Sigmar Gabriel will also have to face up to that reality."

The business daily Handelsblatt writes:

"With its new proposals, the SPD is focusing on what it does best: election campaigning. It was no coincidence that party chief Sigmar Gabriel spoke before the SPD's labor market expert Olaf Scholz at the press conference Monday, which comes just eight weeks before the regional elections in North Rhine-Westphalia."

"Half a year after the disaster in the general election, a desperate SPD is moving away from the idea of putting pressure on the unemployed to accept any jobs that are available -- no matter how successful that idea was. The pressure on the party was too great for it to defend this sort of success, while in opposition. They have long been worried that their position as a major political party may be in danger."

"By moving away from its own reforms, the SPD is setting out on a search for its position in the party spectrum. A stable new position is not discernible, however. The SPD is stuck in permanent election campaign mode. After the North Rhine-Westphalia election on May 9, the party will find out for itself that it cannot get back on its feet this way."