Cost of unity still haunting Kohl: John Eisenhammer in Bonn explains why the German Chancellor faces an autumn of discontent

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The Independent Online
WITHIN days of having approved its self-styled 'austerity budget' for 1992, Chancellor Helmut Kohl's government is under heavy fire once again from the industrial relations front.

The signs are pointing to an uncomfortable autumn as battle continues to rage over who is going to pay what towards the ballooning costs of unification.

Reliable reports are circulating about confidential government discussions on the possibility of raising petrol and oil taxes yet again this autumn as well as internal studies on the feasibility of levying a special unity duty on higher earners.

They are all designed to plug the widening holes in government spending and are all in flat contradiction to Mr Kohl's oft-repeated promise that taxes will not be raised again to pay for German unification.

Adding dramatically to the strained social climate are the government's proposals that its plan for a new insurance programme for long-term care of the sick and elderly should be financed partly by withholding sick pay for the first day of absence from work.

The proposal prompted spontaneous trade union demonstrations over the weekend.

The deputy head of the German trade union federation, Ursula Engelen-Kefer, called the government's proposal 'one of the worst- ever assaults on trade unions in Germany'. She announced preparations for massive social protest after the summer break.

The weekend denunciations by the influential leader of the ruling Christian Democrats' parliamentary party, Wolfgang Schauble, of Germany's 'over-luxurious social security system' and the necessity for a 'greater element of individual insurance' demonstrate the government's sense of urgency about grappling with the public expenditure issue.

Although the speculation about imminent tax and duty increases and the row over funding for care for the elderly appear unrelated, they are all elements of the huge problem dominating German political business at present - how to control and meet the costs of unification.

Even though government spending is increasing at twice the rate forecast in 1991, it is still not keeping up with the demands imposed by unification. Net transfers to the east will amount to DM180bn ( pounds 62.2bn), excluding the railways, post and Treuhand privatisation agency.

If the government is to stick to its budget commitment of keeping public spending increases to 2.5 per cent, and of only agreeing new spending if compensatory savings have been agreed elsewhere, it is widely assumed that cuts will need to be much harsher than those even hinted at so far.

The controversy over the proposals for care for the elderly - one of the most passionately fought-over issues on the government agenda during the past 18 months - highlights the difficult choices being confronted.

Because of demographic changes Germany badly needs to introduce a new system for financing long-term care.

But, largely because of the budgetary difficulties posed by unification, the solution needs to be neutral in terms of public expenditure.

Hence the heated discussion over doing away with the first day's sick pay or an alternative proposal to scrap one public holiday.

The same issue that made the pay round so explosive just a few months ago - how much people in the west are willing to sacrifice for the east - is again testing the social consensus, albeit in a different form.

The same distate for any substantial sacrifice, which prompted such bitter confrontation in the pay round, has the potential to produce an unusually hot autumn for Chancellor Kohl.

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