Narrate the political changes happened in Germany
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but proposal was attacked by virtually other political parties in Germany
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Over the last few decades, Germany and its workers have benefited from a generous social contract. High wages, short working hours and ample health care, pensions and welfare payments have not only allowed German workers to share fully in their nation's prosperity, they have also strengthened German democracy. But the world is changing, and Germany's social contract now contributes to unemployment and stagnation.
After a year of waffling, Chancellor Gerhard Schroder has now embraced economic reality and proposed some mild modifications in Germany's welfare state. But his proposals have been attacked by virtually every other political party in Germany, as well as by the traditional wing of his own Social Democrats. Although the party won a few important mayoral elections on Monday, it has been walloped in a series of state and local elections, which further hampers Mr. Schroder's chances of passing reforms. To save his program and the possibility of creating jobs, he will have to convince the German people that their well-being depends in part on rewriting the social contract.
Germany's welfare state was designed when the country had very low unemployment and higher birthrates than today. Now the unemployment rate is over 10 percent, and fewer workers must support more retirees -- and the ratio will worsen. In addition, Germany has paid almost $100 billion a year for unification -- more each year than the Marshall Plan would cost in today's dollars.
Germany's social benefits now add 40 percent to the cost of each worker -- a killer in an economy where creating jobs must be the top priority. In addition, one-quarter of Germany's budget is now spent on debt. This cannot be sustained.
After a year of waffling, Chancellor Gerhard Schroder has now embraced economic reality and proposed some mild modifications in Germany's welfare state. But his proposals have been attacked by virtually every other political party in Germany, as well as by the traditional wing of his own Social Democrats. Although the party won a few important mayoral elections on Monday, it has been walloped in a series of state and local elections, which further hampers Mr. Schroder's chances of passing reforms. To save his program and the possibility of creating jobs, he will have to convince the German people that their well-being depends in part on rewriting the social contract.
Germany's welfare state was designed when the country had very low unemployment and higher birthrates than today. Now the unemployment rate is over 10 percent, and fewer workers must support more retirees -- and the ratio will worsen. In addition, Germany has paid almost $100 billion a year for unification -- more each year than the Marshall Plan would cost in today's dollars.
Germany's social benefits now add 40 percent to the cost of each worker -- a killer in an economy where creating jobs must be the top priority. In addition, one-quarter of Germany's budget is now spent on debt. This cannot be sustained.
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