Re: [OPE-L] German recession

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Thu Feb 03 2005 - 09:24:18 EST

There is something wrong with your web reference to your 
article I can not down load it.

Does the article touch on the 3 questions that I originally asked? 

-----Original Message-----
From: OPE-L [mailto:OPE-L@SUS.CSUCHICO.EDU] On Behalf Of Michael
Sent: 03 February 2005 12:50
Subject: Re: [OPE-L] German recession

Paul Cockshott schrieb:

>  The BBC yesterday reported that unemployment in
> Germany had climbed to 12% the highest since the 30s.
> What do German list members think the cause of this is
> and
> 1. what will be the effects of Schroeder's policies on
>    the level of employment
> 2. what alternatives are being advanced.
> 3. what do they think should be advanced
At least to the first point some remarks.

In December 2004 there were about 4.5 million people unemployed
(according to the official statistics), now this number increased to 5
million. The half of this increase happened because of a change in
rules: some group of persons, already unemployed, now becoming part of
the statistics. The other half is because of (ordinary) seasonal
reasons. So, there is no dramatic change in this moment, but it is true
that unemployment in the last years is higher than ever. Also this 5
million is a number which is too less. The real number of unemployed
persons may be near 6 million or more.

The Schroeder policy (especially the "Hartz IV" laws) cut considerably
the unemployment support and increase the pressure on the unemployed to
take every job (even if it is paid much less as the usual wage rate, 30%
less are "to bear"). Also the "1-Euro jobs" shall be increased: persons,
who get support can be forced to work for 1 Euro per hour (an income,
which is added to the support) in "useful" areas. Until now this means:
cleaning parks, perhaps in the future: an unemployed teacher has to give
additional lessons for 1 Euro per hour.

The red green government has not only implemented the biggest social
cuts since the end of World War II, by forcing the unemployed to take
every job, they also produce a pressure on all wages. And at exactly the
same time as the cuts of Hartz IV began (Jan. 1st, 2005) a tax "reform"
started lowering considerably the tax rate for high incomes (the highest
rate falls from 45 to 42 per cent, the lowest rate from 16 to 15 per
cent - by the way: for non-germans also 42% may seem high, but with
German tax laws, you have very good chances to diminish your income,
which is really taxed with the official tax rates, so that the "real
tax" in Germany is not higher than in countries, which have (nominal)
lower tax rates).

Lowering the unemployment support will not produce new employment
possibilities, perhaps it will cut demand and destroy some employment.
Past measures of red-green, for example stimulating of so called
"Minijobs" (not full time jobs with less cost for social security)
brought a notable reduction of the number of jobs with full social

In sum, red-green policy is a desaster for the working class in general
and especially for the unemployed and persons with low income. Sure, the
explanation for this policy is complex, but one moment must be
mentioned. The party, which voters have the highest average income, is
the Green party. At least for this group of voters, red-green policy is
perfect. I don't want to say that this is the only reason for this
policy, but it is a fact, which may be not known outside Germany.

For those, who read German, an article on Agenda 2010 and Hartz IV, I
wrote last year, may be interesting. It can be found at my site
( see "Texte zu aktuellen Entwicklungen")

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