Germany's unemployment crisis is still urgent and the latest figures do not suggest any hope of a quick economic turnaround. Nor does it look as if policy changes can be achieved by consensus among trade unions, employers and government following this week's breakdown of tripartite talks and yesterday's radical cuts in welfare and unemployment benefits by the government. The 4.14 million people on the unemployment register (10.8 per cent of the workforce) is half a million higher than in the same month last year.
However, major social and political difficulties lie ahead for Europe's strongest economy if the employers and trade unions cannot agree on remedial action in subsequent talks and if the government sticks to its social welfare decisions. The unions have promised "an autumn of strikes and social conflict not seen by this republic for many years if the government proceeds with the proposed 20 per cent reductions in sick and disability pay. Changes in pension entitlements, a pay freeze for public sector workers, and allowing employers in small firms more freedom to dismiss employees, complete the package. Dr Kohl faces a complex balancing trick in implementing it if Germany is to meet the EMU deficit target by the end of next year.
Some progress had been made in implementing the "Alliance for Jobs" which was hammered out last autumn by the trade unions and the government and whose basic principle is the creation or maintenance of employment in return for low wage demands by the unions. If put into effect across the board, the strategy could have long term effects for traditional industrial relations; from Dr Kohl's point of view it has a rugged common sense making it that rare thing a government backed initiative on the jobs front which, in public relations terms at least, enjoyed widespread popular support.
If the alliance breaks down irretrievably, Dr Kohl will have to present a more confrontational domestic strategy if Germany is to qualify for the monetary union he has so passionately advocated. His appeal to the German public yesterday to pull together could be the first of many intended to mitigate the impact of such a new approach.
In the light of the latest unemployment figures, the greatest danger for Germany is a return to industrial strife. The re establishment of the consensus approach between employers and workers on which the economic miracle of the 1950s and 1960s was built, is the only alternative as the country's gross domestic product continues to decline. The alliance, which has produced trend setting agreements in the chemical and textile industries, would undo some of the gains made by unions which have helped to create inflexibility in the jobs market, but in return would stem the erosion of employment. Flexibility and the maintenance of employment are essential factors for putting the German economy back on track.