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EDITIONS
Thursday, 12 September, 2002, 12:48 GMT 13:48 UK
No economic choice for German voters
German election posters
Germany's economy is faltering, and voters want ideas

German Chancellor Gerhard Schroeder, according to his opponents' campaign ads, is a bumbling dwarf; his rival Edmund Stoiber, meanwhile, is a Bavarian Darth Vader.

In an election with only one serious issue - the economy - and only one plan for dealing with it - create more jobs - campaigning has descended into personal abuse pretty quickly.

Germany's 22 September elections look like being the closest in recent memory.

But whatever the outcome, the country's 4 million-strong army of unemployed can scarcely expect much change.

Motor trouble

The German economy - long sleekly wealthy and still by far Europe's biggest - has come off the rails in spectacular fashion.

Open in new window : Key election graphs
Click here to see German election statistics

At the last count, its annual growth rate of just 0.1% was the slowest in Europe.

Corporate insolvencies, long staved off by government generosity, have jumped 10% in the first half of this year.

The stock market, even without the taint of corporate scandal that has infected Wall Street, has lost 40% of its value this year alone, twice as much as New York's Dow Jones index.

Worst of all, unemployment, at 8.3% even measured favourably, is the fourth-highest in the EU and three times worse than in the neighbouring Netherlands.

Too little...

Much of the blame, it must be admitted, can be laid at the door of former Chancellor Helmut Kohl, whose 16-year rule saw the twilight of Germany's post-war prosperity without doing anything to stop it.

Nor has Mr Schroeder's left-of-centre coalition government been wilfully incompetent.

Frankfurt Stock Exchange trader
Tired of waiting for the upturn
His finance minister, Hans Eichel, has become a byword for prudent niggardliness.

And the government has steered through more reform in four years than Mr Kohl managed in 16, including the introduction of the euro, the unwinding of incestuous cross-shareholdings between companies and banks, and the beginnings of a long-term tax shake-up.

But many voters see all this as either irrelevant or insufficient, especially as the government has neglected what some see as the root cause of Germany's economic weakness - its high labour costs and over-generous social security arrangements, which combine to dissuade firms from hiring.

Two years ago, Mr Schroeder insisted that, if he failed to bring the jobless total back below 3.5 million, he would not deserve re-election; now, that total is over 4 million, and showing no signs of shrinking.

... too late?

As the election approaches, Mr Schroeder is doing his best to show he is ready for action.

Gerhard Schroeder
Mr Schroeder wants a gentle approach to a tough problem
His Social Democrat Party (SPD) has produced a plan to get Germany back to work, cobbled together from the milder bits of an already modest set of recommendations by a friendly industrialist, Peter Hartz.

Under the plan, Germany will create one-stop job-and-welfare centres, ending the previous peculiar separation of the two roles.

In addition, workers will be persuaded to take on part-time, temporary and low-paid work, and the tax system will be further amended to suit the sort of small and medium-sized firms that still employ most Germans.

Somewhat optimistically, Mr Hartz has claimed that his recommendations - if acted on in full - will halve unemployment within three years.

Spot the difference

Predictably, Edmund Stoiber, Mr Schroeder's main challenger, calls the SPD plan "rubbish".

But his side's own labour market policies do not look enormously different.

The Christian Democrat Union (CDU), the main party in Mr Stoiber's conservative bloc, is also hoping to boost incentives for non-traditional forms of working, lighten the load for the small businessman and all the rest of it.

Dow Jones and Dax indexes

Unlike the SPD, the CDU is aiming to trim back unemployment benefits, restricting them to those genuinely searching for a job - roughly half of the current total, if surveys are to be believed.

But like the SPD, the CDU comes nowhere near acknowledging the fact that German workers are pricing themselves out of the global job market.

Right-wing, sort of

In facing the not-very-left-wing Mr Schroeder, Mr Stoiber is hampered by the fact that he and his supporters are right-wing only in a deeply muddled way.

Edmund Stoiber
Mr Stoiber: Not daring to be different
The sort of left-right duality seen in France, where a free-market alliance has just swept aside a socialist government, does not obtain in Germany.

The CDU and their allies harbour some orthodox free-marketeers, but many within the bloc are old-fashioned interventionist conservatives, just as shy of reform and suspicious of Anglo-Saxon capitalism as their SPD rivals.

Mr Stoiber, for the past eight years prime minister of the deeply conservative state of Bavaria, seems to be in the latter camp.

Bavarian bother

And it is Mr Stoiber's record in Bavaria that is producing the only contentious economic debate so far.

Schloss Neuschwanstein
Beautiful... but economically mismanaged?
Mr Stoiber, keen to contrast himself with Mr Schroeder's economic impotence, stresses that he has transformed the state from a rural backwater into Germany's silicon heartland, home of hi-tech giants such as Siemens and Infineon.

But this transformation, his rivals argue, was expensively bought, involving some 4bn euros (2.5bn; $3.9bn) of state money, and a web of subsidies and other hand-outs underpinning the region's standard of living.

Nor is Bavarian prosperity rock-solid.

A string of big local corporate names - including Grundig, Kirch, Fairchild Dornier and Maxhutte - are either failed or failing, and overall insolvencies are up by two-fifths this year, the highest rate in the country.

Unemployment, although still low, is growing three times as quickly as the national average, and even faster among the young.

Economic growth
Even Munich, the state's shamelessly well-heeled capital, warned recently that municipal finances were on the point of bankruptcy.

No choice

The disagreement over Bavaria's fortunes only underlines how little ideological difference exists between the two main candidates.

Flooding in Germany
Another problem to throw money at

Both are in favour of throwing money at problems: Mr Schroeder has stretched Germany's budget to the limit of EU-mandated levels, and Mr Stoiber has advocated raising taxes to pay for clearing up this summer's floods.

And both fight shy of admitting that Germany is anything more than a victim of the global economic slowdown - in need of a tonic, certainly, but far from terminal.

Even Mr Schroeder's campaign broadcasts acknowledge this, arguing only that his economic policies would be more "sozial" and "menschlich" - roughly, more socially-conscious and humane - than the alternative.

Darth Vader or the dwarf; the choice for Germany's army of jobless is not a pretty one.

Gerhard Schroeder

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See also:

07 Aug 02 | Business
07 Aug 02 | Middle East
06 Aug 02 | Europe
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09 Jul 02 | Business
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