Text size:

  • Small
  • Normal
  • Large

Painful welfare cuts for booming Germany

Germany is enjoying its strongest economic boom since 1990, but millions of people on welfare benefits face painful cuts over the next four years from the government's austerity package.

BERLIN // Germany is enjoying its strongest economic boom since 1990, but millions of people on welfare benefits face painful cuts over the next four years from the government's 80 billion (Dh409.79bn) austerity package.

The more than 900,000 long-term unemployed, classified as people who have been out of work for more than a year, are about to suffer a range of reductions in their entitlements from next year.

Allowances for heating and pension contributions will go and there will no longer be parental benefits for newborn babies.

The reductions will affect up to 6.5 million people. Trade unions and the opposition centre-left Social Democratic Party (SPD) have accused the chancellor Angela Merkel of "brutal" cutbacks, hitting the weakest in society.

Mrs Merkel's centre-right coalition plans to go ahead with her austerity programme despite the surprisingly strong economic rebound, driven by surging exports especially to China, which is expected to push growth in Europe's largest economy to more than 3 per cent this year.

"The unemployed and families are being forced to pay for half the budget consolidation, while the coalition's clientele of voters is being spared," said the chairman of the SPD Sigmar Gabriel when the cuts were announced in June.

The opposition says Germany does not need to make radical spending cuts because the economic rebound will flush tax revenues into the budget.

Mrs Merkel argues the recovery may be short-lived and the country needs to set an example of fiscal discipline to the highly indebted EU nations such as Greece, Portugal, Spain and Ireland, which have to make far bigger cuts.

Germany's budget deficit, at 3.1 per cent last year, is only just above the EU's 3 per cent ceiling and is dwarfed by the deficits of other leading economies such as France (7.5 per cent) and Britain (11 per cent).

German unemployment, at an adjusted rate of 7.5 per cent last month and falling steadily this year, rose far less during the global crisis than in other countries.

Protests against the austerity programme have been muted in Germany when compared with its EU neighbours. The few strikes that have taken place in recent months have been in defence of pay claims.

Railway employees staged warning strikes last Tuesday and steel workers walked out last month. The steel workers secured a 3.6 per cent pay rise.

Workers in other industries can also expect increases, provided the economy continues to grow.

 

dcrossland@thenational.ae

Back to the top

More articles


Editor's Picks

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Above, the private pool of Ocean Heights' five-bedroom penthouse flat. Courtesy Christie’s International Real Estate

In pictures: Penthouse flat is height of Dubai luxury living

A five-bedroom penthouse in Ocean Heights in Dubai Marina is on sale for Dh25 million and comes with a private pool and an unparalleled view of Dubai.

 The cooling towers of the Temelin nuclear power plant near the Tyn nad Vltavou in Czech Republic. The country wants to continue expanding nuclear energy capacity despite cancelling a tender to build two new units. David W Cerny / Reuters

In pictures: Best business images for the week to April 17, 2014

Here are some of the best business images for the week to April 17, 2014.

 Three generations of the Hakimi family tend to their stall Crawford Market in Mumbai. Subhash Sharma for The National

In pictures: Shopper’s delight at Crawford Market in Mumbai

Crawford Market is an old British-style covered market dealing in just about every kind of fresh food and domestic animal imaginable. Later on renamed Mahatma Jotirao Phule, the market remains popular among locals and visitors by its old name, taken from Arthur Crawford who was the first municipal commissioner of the city.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.

Events

To add your event to The National listings, click here

Get the most from The National