MUNICH, Germany, Aug. 16 (UPI) -- Fifteen years ago they were heroes, ignoring the secret police to march defiantly through the grim streets of East Germany with banners that said: "We are the people - Listen to us."
The East German workers helped bring about that 1989 Autumn of Miracles, as the Hungarians ripped great holes in their Iron Curtain, the East German regime lost its nerve, the Czech police refused to shoot their own people and the Berlin Wall fell.
And now the same people, with the same banners, are marching again in the old East German cities of Magdeburg, Dresden and Leipzig. This time, their target is not the Soviet occupation or the Berlin Wall or the unelected puppet regime of East Berlin. This time they are marching against the elected government of a united Germany. And they are marching less for the heady goal of freedom than for the hard cash of their welfare payments.
When the Berlin Wall fell, West Germany was by far the richest country of Europe, the Deutschmark was the most prized currency, and both Britain's Margaret Thatcher and France's Francois Mitterrand tried to delay unification, fearing that an enlarged Germany would dominate the new Europe. In fact, unification has been the undoing of Germany, weighing down the efficient West with a giant and burdensome welfare state in the East. For the past eight years, Germany has been at or near the bottom of Europe's league tables for economic growth, and GDP per head is higher now in Tony Blair's Britain than in Germany.
Chancellor Gerhard Schroeder has launched a fairly modest set of reforms called Agenda 2010 that are designed to liberalize labor markets and cut welfare costs and taxes over the next seven years. One feature, to make long-term unemployment less attractive, comes into force on Jan. 1, and with unemployment around 20 percent in the old East Germany (twice as high as in the former West Germany), the locals fear that it is aimed at them.
Currently, if someone loses a job in Germany they get 67 percent of their working salary for 30 months, and then get about 55 percent of their old salary for life, plus extra help to pay for rent, health care, holidays and children. A family with two children can easily make almost as much while permanently unemployed as they did when working. Schroeder's reform will replace this system with a means test, which the tabloid press attacks as "robbing the kiddies' piggy bank," and the single unemployed will be on a flat payment of around $110 a week, and to get it they have to show they are actively seeking work.
So even though this reformed system would be seen as very generous in the United States or Britain, it is being condemned in the East German demonstrations as the most outrageous imposition since the Red Army last ruled the roost. Ironically, those most outspoken against Schroeder are the PDS, the former Communists now known as the Democratic Socialists.
Even more threatening for Chancellor Schroeder, many of his traditional supporters in the Social Democratic Party agree with the East German demonstrators that the Schroeder reforms will unravel the German social system. Schroeder's old left-wing rival for the party leadership, Oskar Lafontaine, is threatening to join a new breakaway leftist party "to defend the hard-won rights of workers." With regional elections due in September, and Schroeder's own opinion poll ratings down near 20 percent, a mood of panic is beginning to grip the Social Democrats.
Schroeder and his supporters say that by doing the responsible thing and pushing through the reforms, even against the opposition of their natural allies in the labor unions, they can demonstrate that they are the natural and worthy party of government and the voters will reward them.
"In the long run, it is a never a mistake for a political party to do the right thing - even if it hurts at the time," says Economic Minister Wolfgang Clement, who also says the current East German demonstrations are "a historical insult" to the people who brought down the Berlin Wall.
The question is whether this cut of unemployment pay to push people back into the labor market is the best strategy for getting the sluggish German economy moving again. The real problem is less unemployment than underemployment, with the average German working only 37 hours a week and taking 6 weeks vacation.
The result is that a German works on average for only 1,400 hours a year, compared to 1,700 for a Brit or an American. When actually employed, a German worker usually produces more output per hour than his British or American counterpart; this is largely because knowing the very high cost of labor, German managers tend to invest in the latest labor-saving technologies.
So if the Schroeder reforms simply get the long-term unemployed back into low-paying jobs, while most Germans still take long vacation and short working weeks, there will be only modest impact on the overall German economy. But tackling that issue would mean a head-on clash with the labor unions and with the employed German workers who are the mainstay of Schroeder's party. That is the last thing Schroeder wants to do.
So the marchers of Magdeburg are likely to march on, and Schroeder's left-wing support will continue to dribble away, while the Germany economy stays becalmed in the doldrums.
But in the private sector, something is stirring. German employers, understanding the limits to what government can or dare do, are taking matters into their own hands. Two Siemens plants, where the unions were faced with the option of working more hours or seeing production shifted to low-wage Hungary, decided to accept the 40-hour week. Daimler-Chrysler employees in individual plants are now accepting similar deals, while their managers are trimming their own benefits. The real news from Germany is less that the East Germans are marching again, but that German employers are threatening to vote with their feet by investing elsewhere.
