SPD Split Widens on Schröder Reforms

Criticism at Chancellor Gerhard Schröder's planned reforms intensified over the Easter weekend, as Social Democrat rebels warned the SPD not to turn their party into a vehicle to keep the Chancellor in power.

Schröder announced a package of sweeping reforms last month in an attempt to revive flagging German growth and shore up the country’s creaky social security system, but his “Agenda 2010” plan has encountered massive criticism from unions and the left-wing faction of the SPD. At the heart of the reforms are proposals to cap unemployment benefits at 12 months and make it easier for small firms to hire and fire new workers.

Schröder was forced to give into demands from the grassroots of the SPD last week agreeing to hold a special party congress in Berlin on June 1. Twelve SPD parliamentarians on the left wing of the party have tabled to be taken at the congress in a bid to show their disagreement at the Chancellor's reforms.

Rebels warned: don't damage parliamentary majority

But the SPD General Secretary, Olaf Scholz warned rebels at the weekend that going ahead with the vote was "a very bad idea."

In an interview with German news agency, dpa, Scholz said it was the "responsibility of every SPD member not to endanger the party's (slim) parliamentary majority." He added, however, that such a vote was likely to fail. Members on the right of the SPD attacked Scholz at the weekend for "misjudging" the extent of the need to discuss the reforms.

Yet SPD members who are calling for the vote of confidence said at the weekend that the situation could be avoided. If a "bridge could be built" to the SPD left, the vote would be unnecessary, one of the members who is calling for the vote of confidence, Ottamr Schreiner, told Berlin Sunday newspaper, Tagesspiegel am Sonntag.

But whilst he is facing unrest in his own party, Schröder's reforms have found favour in unlikely quarters.

CDU Support for reforms

After the FDP registered their support, the conservative Christen Democrats have also said they have faith in the Chancellor's reform agenda.

CDU chief, Angela Merkel, told Sunday broadsheet, Welt am Sonntag, that the reforms were going in the right direction and that "we will go along with them." The chairman of CDU sister party, the CSU, Edmund Stoiber, told the Frankfurter Allgemeine Zeitung even though he considered that the reforms did not go far enough, he would not "willingly block them."

Economy grinds to a halt

The reforms have become necessary after Europe’s largest economy has stagnated under the weight of its generous welfare system and constricting labor market policies. Economic growth slowed to only 0.2 percent in 2002, its lowest annual rate since a recession in 1993, and German unemployment is running at a five-year high of 11 percent.

Unfortunately for Schröder, even if he faces down his own revolting backbenchers and regional SPD chapters at the party congress, Germany’s trade unions have announced major demonstrations against the chancellor’s reform plans starting May 1.

Traditionally supportive of the SPD, the unions argue relaxing job protection rules won’t create new jobs and are instead calling on the government to spend more on public works projects to spur the economy.