Schroeder pushes through economic programme

German MPs today approved speeding up a €14bn tax cut by a year and trimming jobless benefits in the battle to revive Europe’s largest economy, giving Chancellor Gerhard Schroeder a boost as he seeks unpopular changes in the welfare state.

Schroeder, who left a European Union summit a day early for the debate in parliament’s lower house, said the result was evidence his squabbling centre-left coalition “stands together when it comes to modernising Germany.”

“We need the ability to take action demonstrated here in order to give our country a good future,” he told reporters.

Schroeder softened some of the proposals to break dissent among left-wing defenders of the welfare state inside his Social Democratic party and secure his coalition’s majority in parliament.

Despite today’s victory, Schroeder faces resistance in the opposition-dominated upper house, where his conservative foes have said they will seek changes to toughen the measures.

The lower house also approved measures to increase pressure on the unemployed to take jobs or risk a cut in benefits, changes designed to lower payments for the long-term jobless, and an overhaul of the government’s nationwide network of job placement offices to cut bureaucracy.

All are meant to combat a jobless rate stuck above 10%, and Schroeder has staked his future as chancellor on winning final approval for the package by Christmas.

Economics and Labour Minister Wolfgang Clement told parliament he hoped the government’s overall labor reform efforts would cut the number of jobless by as much as a fifth.

But he acknowledged that months of debate over the future of welfare-state comforts – supported by governments of the left and right since World War II - have many Germans worried.

“A lot of people are unsettled, there is no doubt about it, but the reform is necessary,” Clement told reporters outside the chamber.