Schroder to forge a new alliance to create jobs

The German Chancellor, Mr Gerhard Schroder, is hoping to give his month-old government a fresh start when he welcomes employers' leaders and trade unionists into his cabinet room at lunchtime today.

The three-hour meeting marks the start of the "Alliance for Jobs", a key element in Mr Schroder's strategy for taking many of Germany's four million unemployed off the dole.

His Labour Minister, Mr Walter Riester, was confident yesterday that the talks would be a success despite broad differences between employers and unions.

"We have to enter these talks without any conditions or demands. I am confident that we will agree on many subjects and that we can create a framework to generate jobs," he said.

For the Chancellor, the alliance represents an opportunity to put an end to weeks of blistering criticism of his government from business leaders, the media and some of Germany's partners abroad.

The initiative could also provide him with an opportunity to step out of the shadow of the man many critics claim is really running Germany - his Finance Minister, Mr Oskar Lafontaine.

Mr Lafontaine stepped up pressure on the employers yesterday when he said he was considering putting a legal limit to the number of overtime hours worked.

"We expect employers to provide apprenticeships, get rid of unnecessary overtime and provide new jobs," he said.

The principle behind the proposed pact is simple. The government will cut taxes, giving employees more take home pay and reducing the need for big pay rises. This will allow businesses to create more jobs, thus easing the burden on the state's finances.

Trade unionists are proposing a retirement age of 60 - with full pay - and Mr Klaus Zwickel, head of Germany's biggest union, IG Metall, said yesterday he was confident that the measure would be adopted.

"If we succeed in getting the pension at 60 years, around 2.4 million people will take up this opportunity in the next five years. Even by the employers' reckoning, this would create 800,000 new jobs," he said.

But business leaders insist that the key to job creation is a more flexible labour market with lower taxes. Mr Hans-Olaf Henkel, leader of the Federation of German Industry remains pessimistic about the prospects for the talks.

"You can hardly expect me to go into these talks with high expectations. Look at the burdens that are already on the talks, like tax - everyone knows that tax reform will lead to greater pressure on small and medium-sized firms," he said.

Reuters reports:

The German Foreign Minister, Mr Joschka Fischer, said yesterday that a date for allowing new members into the EU should be agreed by the end of next year.

"By that time, we ought to have introduced all the necessary structural reforms of the EU," Mr Fischer, a leader of the left-wing environmentalist Greens Party, told the weekly newspaper Welt am Sonntag. Talks with the EU hopefuls - Poland, Czech Republic, Hungary, Slovenia, Estonia and Cyprus - started last month, but Germany has signalled a cautious note on the process.

He repeated that he would press for NATO to declare it will never be first to use nuclear arms - a stance which the US and the two European nuclear powers, Britain and France, firmly oppose.

"The expansion of the nuclear arsenal is a serious risk to security. We need a climate of non-expansion and the discussion about not being first to use nuclear weapons gives the right signal," he said. The Chancellor defended Mr Fischer's right to raise the issue but said Germany remained committed to NATO no matter what.