[an error occurred while processing this directive]
BBC News
watch One-Minute World News
LANGUAGES
Russian
Polish
Albanian
Greek
Serbian
Turkish
More
Last Updated: Friday, 19 December, 2003, 14:46 GMT
Bundestag approves major reforms
Gerhard Shroeder votes in parliament
Gerhard Shroeder hopes the reforms will attract investment
Germany has approved widespread changes to labour and welfare systems set out in Chancellor Gerhard Schroeder's ambitious Agenda 2010 reform programme.

Key elements of the package approved on Friday include a 15 billion euro ($18.6bn) tax cut as well as labour reforms making it easier to sack staff.

Mr Schroeder said he was prepared to discuss further tax reforms with the conservative opposition.

Critics say the reforms will not help resolve Germany's economic problems.

Mr Schroeder had negotiated a deal with the opposition parties last weekend that watered down his tax cuts, while beefing up some of the welfare and employment changes.

This is a signal that Germany is on the move. Our country is resolutely taking on the challenges posed by the 21st Century
Gerhard Schroeder
Twelve members of his own Social Democrat Party (SPD) and the coalition Green Party defied Mr Schroeder's calls for unity and voted against one of the proposals to put increased pressure on the jobless. But it was not enough to defeat the measure.

They had earlier grumbled about an "Americanisation" of the labour market.

The tax cut, originally due in 2005, will come into force in January next year. Mr Schroeder says it will be financed through fresh borrowing, privatisations and reductions in government subsidies.

Tough on unemployed

Other reforms will force unemployed people to accept jobs they may not want to take.

Presenting the measures to the lower house, the chancellor said: "This is a signal that Germany is on the move. Our country is resolutely taking on the challenges posed by the 21st Century."

The reform package backed by the houses of parliament includes:

  • an overhaul of Germany's comprehensive network of job centres
  • enabling companies with up to 10 employees to lay off workers more easily
  • making long-term jobless accept jobs offered to them or lose 30% of their benefits
  • an overall cut in welfare payments
  • reducing tax breaks and subsidies for homebuyers, commuters, farmers and others
  • a rise in tobacco taxes - increasing the cost of a pack of 19 cigarettes by 23 euro cents

Mr Schroeder said he was prepared to discuss a simplified tax structure proposed by Christian Democrat (CDU) finance spokesman Friedrich Merz.




WATCH AND LISTEN
The BBC's Tristana Moore
"A vote the government knew it couldn't afford to lose"



SEE ALSO:
German parties agree reform deal
15 Dec 03  |  Business
German jobless rate inches lower
04 Dec 03  |  Business
Germany inches towards reform
17 Oct 03  |  Business
Germany divided over tax cut plans
07 Jul 03  |  Business
Germany bets on tax cuts
30 Jun 03  |  Business


RELATED BBCi LINKS:

RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS AND SERVICES

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East | South Asia
UK | Business | Entertainment | Science/Nature | Technology | Health
Have Your Say | In Pictures | Week at a Glance | Country Profiles | In Depth | Programmes
Americas Africa Europe Middle East South Asia Asia Pacific