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Last Updated: Monday, 30 August, 2004, 19:11 GMT 20:11 UK
Germans protest at reform plans
Protestors march in Berlin against government plans to reform the welfare system and labour market
Analysts say that reforming the economy is key to its success
Thousands of Germans took to the streets on Monday to protest at government plans to cut welfare spending and reform the labour market.

Organisers estimate that more than 100,000 people will march in cities and towns including Berlin and Leipzig.

The protests are the latest in a series of rallies against Chancellor Gerhard Schroeder's reform plans, which would cut benefits for the long-term jobless.

Germany is looking to cut its generous welfare plan as the population ages.

Oskar Lafontaine, one of Chancellor Gerhard Schroeder's former allies and now a vehement critic, showed up at a protest in Leipzig.

Mr Lafontaine quit as leader of Mr Schroeder's Social Democrats after clashing over policy. He has called on Mr Schroeder to resign, Reuters reported.

East-west tension

Many analysts say the reform package is essential to reinvigorating Germany's flagging economy, beset by slow growth and high unemployment.

Gerhard Schroeder
Schroeder: No retreat on reforms

Opposition has been at its most vehement in the formerly communist east of the country, where unemployment is twice as high as in the more prosperous west.

Analysts say they have tapped into widespread resentment in east Germany over large-scale job losses and greater economic uncertainty since reunification with the west in 1990.

In west Germany, meanwhile, some commentators have begun to question the 90 billion euro (60.3bn) subsidy that the east receives each year.

Loud and clear

At the weekend, Mr Schroeder played down the east-west tensions, and signalled his determination to push through the reform package.

"Showing sensitivity and trying to relieve people's fears does not mean changing, it means explaining why what we are doing is necessary," he said in an interview.

Firms also are facing difficult times, with Volkswagen, Europe's largest carmaker, the latest to try to take on unions and make major cost cuts.

The threat of industrial action weighed on Volkswagen's shares on Monday after unions last week turned down an offer from the company's management to share in a pay freeze.

Talks are scheduled between Volkswagen and IG Metall, one of Germany's largest unions, for the middle of September.


SEE ALSO:
Schroeder holds firm on reforms
18 Aug 04  |  Europe
German welfare rallies escalate
17 Aug 04  |  Europe
German unemployment climbs in May
08 Jun 04  |  Business
Surprise rise in German jobless
06 Apr 04  |  Business


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