Retirement pensions are currently 70 percent of wages, and the government has declared its intention to lower them considerably. In the first major change in the pension system since the 1950s, the government is seeking to substitute private retirement accounts for a portion of the pension by offering tax incentives. The government says it seeks to have younger generations invest up to 4 percent of their gross income in private pension plans.

The assault on pensions comes in the wake of a major tax cut bill, hailed by German capitalists, that will give them an estimated $30 billion in tax breaks and will eliminate capital gains tax on sales of big corporate cross shareholding.

Schröder announced a one-year delay in the introduction of the private pension plan, partially due to opposition to the move from trade unions. The Greens, a junior coalition partner with the Social Democrats, complained there "has been a lack of leadership" on the pension issue. "Schröder hasn’t been willing to take the reins," said one official. The Green Party has made overhauling the pension system a priority. "We must seek opportunities to emphasize our role as modernizers," said Fritz Kuhn, the Green’s cochair.

Green parliamentary leader Kerstin Müller attacked Schröder’s plan to delay until 2003 cuts in state pensions. "We’re shelving the problems that pensioners face still further into the future," she said, "at the cost of the young. The Greens won’t stand for that."

Deputies for the Social Democrats and the Greens voted in strong majorities November 14 to move forward with the pension reform plan. Labor minister Walter Riester said he was sure "this huge reform project would be taken through parliament with determination." The opposition Christian Democratic Union backs the measure as well.

The government assault on the working class, however, is not smooth sailing, nor moving as quickly as big business would hope. In a "half-term report" card, the Financial Times of London remarked that Schröder has not made enough inroads against the unions. Under "labor market," he received a "D" due to "Zero action, and some backsliding. Rather than encouraging flexibility, Schröder has strengthened existing restrictions, reflecting union opposition to reform." These include tightening up worker representation in the workplace and restricting employers’ use of short-term job contracts.  
 
 
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