Reuters/Tobias Schwarz

Thousands took part in August 16 union-organized march in eastern German city of Leipzig against Berlin's cuts to unemployment insurance.

The new legislation, known as “Hartz IV,” is the fourth in a series of anti-labor measures initiated by a commission led by Peter Hartz, an advisor to Chancellor Gerard Schröder. The law is scheduled to go into effect January 2005.

The Hartz measures are part of the German government’s course of chipping away at the social wage of working people in order to remain competitive, during a period of growing economic crisis marked by intensifying competition among the main imperialist powers over domination of the world’s markets and resources. The capitalists in the United States, especially, have made more progress than their imperialist rivals in Europe and Japan in lowering labor costs and increasing labor productivity through job speed-up, cutting the workforce without reducing production, and attacks on the social wage.

Unemployment benefits in Germany are among the highest in Europe, currently paying 60 percent of previous earnings for the first 32 months out of work, and about 55 percent thereafter. Hartz IV will reduce this to a single 12-month period and eliminate benefits after that, replacing unemployment compensation with welfare payments, which are currently 345 euro ($422) per month in the west, and 331 euro plus rent and heating subsidies in the east. Welfare is available only for those “seeking work.”

Trade unions and the Party of Democratic Socialism (PDS)—the remnant of the pro-Moscow Communist Party that ruled east Germany—are building the Monday protests. The German Trade Union Federation and IG Metall, the largest industrial union in Germany with 2.8 million members, are among the labor groups behind the demonstrations.

IG Metall has another beef with Peter Hartz, who is the personnel director at Volkswagen, the largest auto company in Europe, where the union is demanding a 4 percent raise and 10-year job guarantee for 100,000 workers. The union has said it may strike if no agreement is reached by the end of October.

Numerous editorials in the German press indicate that the stability of the ruling Social Democratic Party is waning. The Berlin Neus Deutschland reported, “A hundred thousand people have left the [Social Democratic] party. Some of them want to start a new one, and former party head Oskar Lafontaine is among them.”

The situation has increased political polarization in the country as the PDS, as well as right-wing nationalist parties such as the National Democratic Party and the German People’s Union, are gaining support. Support for the PDS has now grown to 7 percent nationwide in the polls, while the Social Democratic Party is at 21 percent. The PDS is now the second-strongest party in some of the most economically depressed areas of the east.

An economic report compiled by three German research institutes this year showed an increase from 12.5 percent in 2001 to 13.5 percent in 2002 in the number living below the official poverty level in Germany nationwide, as well as a widening gap in income levels.

Unemployment now stands at 8.5 percent in the west and 18.5 percent in the east. It has been particularly high in eastern Germany since reunification with the former West Germany in 1990, as state-run enterprises were shut down as part of the effort to re-establish capitalism.

An article in the August 10 Wall Street Journal pointed to an 0.3 rise in unemployment in Germany in April-June, or an additional 112,000 people out of work, as a positive example of the impact of the Hartz laws on jobs compared to the same period a year earlier, when unemployment rose 1.2 percent.  
 
 
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