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Schröder Blunders,
Sticks to Austerity Plan

Special to New Federalist

Aug. 19, 2004 (EIRNS)—In his semi-annual report to the nation, given Aug. 18, German Chancellor Gerhard Schröder announced that the "Hartz IV" package of so-called economic reforms, which has been the object of growing mass demonstrations in recent weeks, will be pushed through "without any changes." Schröder claimed that the "reforms," which amount to drastic cuts in payments to the unemployed, especially the long-term unemployed, are necessary "to keep the social welfare state intact for future generations."

Adding insult to injury, Schröder attacked the ongoing Monday demonstrations for, in effect, equating his government with "a dictatorial regime."

Currently, if a German loses his or her job, 50-60% of the last average income earned will be paid as jobless support by the state. This may be 700, 800, or even more than 1,000 euros per month. After 12 months (for Germans under age 55) or after 18 months (for those above 55), one enters the category of long-term unemployed citizens, who receive only around 50% or less. And after another 24 months, one becomes a social welfare recipient who will receive, at most, 650 euros per month, but in most cases, substantially less.

With the Hartz IV package, the new standard pay for all long-term unemployed (12 months or more out of work) and welfare recipients will be only 345 euros a month for citizens in Germany's capital of Berlin, and her 10 western states; citizens in the five eastern states will receive only 331 euros. This will the maximum, depending on the following conditions:

  1. the citizen must first live on proceeds from the sale of any property above a level of 26,000 euros (cars, home, other real estate, life and other insurance); only after spending that money, will a citizen receive pay under the Hartz IV system;

  2. any job offered through the state and private job agencies must be accepted, regardless of low pay, qualifications, or distance from the worker's residence; 3) in case of failure to get a new job, a citizen has to prove that the failure is not her or his fault.

Besides shredding the safety net for Germany's millions of long-term unemployed (the country has an institutional unemployment level of almost 10%), Hartz IV does not create a single job. Yet it is conservatively estimated that there are at least 8.6 million unemployed in the nation.

The Hartz measures represent a step down the road of killing austerity like that of Germany's infamous "Hunger Chancellor" Heinrich Brüning in the early 1930s, imposed to try to help shore up the bankrupt world monetary system, and later of Hjalmar Schacht, Hitler's Economics Minister, who sacrificed the living standards of the population to fund Hitler's war machine. Today, by clinging to such measures, which are being demanded by the central bankers of Europe and the International Monetary Fund to maintain the present bankrupt monetary system, Schröder is signing his own political death warrant, unless he comes to his senses in the very near term.