German drive on job creation

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SEEKING TO recreate the consensus politics of a bygone era, Chancellor Gerhard Schroder yesterday brought German business leaders and trade unionists together for the first of a series of meetings intended to forge a common programme to fight mass unemployment.

"I am optimistic that we will be able to make step-by-step progress," Mr Schroder said after the session. Employers' representatives, however, seemed in less convivial mood, complaining of the high taxes that cripple enterprise, and the rising cost of the welfare state.

The idea of an "Alliance for Jobs" is one of the central themes of the new centre-left government. It was mass unemployment that brought down Helmut Kohl, and it is this issue that may undo Mr Schroder's administration.

With four million Germans on the dole, the Social Democrats need quick results. Since the proposed tax reforms are not expected to make a dent in unemployment, the government is pinning its hopes on its ability to persuade the two natural antagonists of the labour market that working together was in their best interest.

Employers' organisations and the trade unions are being urged to make sweeping concessions. In theory, an alliance for jobs could succeed, if the unions agreed to a reduction in the cost of German labour - among the highest in the world - in return for an undertaking by the employers that they will start hiring extra staff.

In practice, though, the employers' organisations are in no position to dictate to companies, such as Siemens, whom they should recruit. Nor are union bosses able to enforce a pay-cut across the board, even if they wanted to. Similar talks two years ago broke up in failure and triggered a wave of nationwide strikes.

Yesterday, the unions asked for curbs on overtime, which in their view would force companies to take on extra staff.