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Last Updated: Friday, 17 October, 2003, 13:14 GMT 14:14 UK
Schroeder wins key reform vote
Gerhard Schroeder
The vote has brought temporary relief for Schroeder
The German parliament has narrowly backed a package of social and labour market reforms which the chancellor, Gerhard Schroeder, staked his career on.

The six bills making up the package were passed with majorities of between seven and 15, with the closest margin in a vote to bring forward tax cuts.

The reforms, unveiled earlier this year, are aimed at revitalising Germany's economy - currently stuck in recession.

We need to achieve a new way of thinking about employment policy,
Wolfgang Clement
Economy minister
The BBC's Ray Furlong in Berlin says the vote is a crucial victory for Mr Schroeder, who had returned early from the European summit in Brussels and threatened to resign if he did not receive the support of his own party.

Mr Schroeder's threats combined with last minute changes to the bills enabled him to rally enough votes to overcome the conservative opposition.

But he still faces a fight to get the bills through the opposition-controlled upper house.

The opposition wants to beef up the reforms and Mr Schroeder will now have to reach a deal with them. He must also be able to sell that deal to his own party.

Reversing the tide

Economy Minister Wolfgang Clement opened the proceedings with a call for the bills to be approved in order to reduce the unemployment rate.

"We need to achieve a new way of thinking about employment policy," he said.

Cuts in unemployment benefit
Tax cuts next year
Tax amnesty
Higher tobacco duties
Reform of local government finances
Reform of Federal Labour Office

"Those who reject acceptable jobs offered to them cannot expect to receive public support."

Germany has more than four-and-a-half million unemployed, a bulging budget deficit and an economy in recession.

The bills passed on Friday are part of a programme of reforms aimed at reversing the tide.


Key elements include cutting benefits for unemployed people and raising tobacco duties.

There are also plans for a tax amnesty, allowing evaders to repatriate money between the beginning of next year and March 2005, which the government hopes will bring in an extra five billion euros.

As a sweetener, there is also 15 billion euros worth of tax cuts, a year earlier than originally planned.

But Germany's unions have attacked the plans as a betrayal and Mr Schroeder was heckled this week while addressing a union conference.

The BBC's Stephen Sackur
"Chancellor Gerhard Schroeder had staked his career on transforming Germany"

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