Agreement grows for revival reforms in Germany

BERLIN - There is a growing consensus among German politicians over how to get on with reforms aimed at reviving Europe's largest economy, but the lack of flexibility in the country's troubled labour market remains a big worry.

Economy Minister Wolfgang Clement, who has the task of reducing record levels of unemployment, said attitudes to finding work would have to change if the situation was to improve.

"We need to be close to companies and jobs and we also need mobility and flexibility, which is still highly underdeveloped in Germany," he said.

"What I mean here is that looking at studies, [there is] still little willingness at present to change for the sake of getting to work or finding a new job. This cannot continue."

Clement was speaking after seasonally adjusted unemployment, which has risen for more than a year, neared five million last month - and hit its highest level since World War II.

But opposition leaders signalled they were ready to work with the Government on tackling the problem.

Opposition Christian Social Union boss and powerful Bavarian state premier Edmund Stoiber said cross-party measures discussed at a so-called "job summit" last month would come to fruition.

"The agreements of the summit will be implemented, and we will see them through Parliament constructively and speedily."

After the summit, disagreements on how to proceed with the proposed reforms had held up discussions, but recent developments have suggested co-operation is growing.

Aside from boosting job growth, the Government wants to cut the basic corporate tax rate to 19 per cent from 25 per cent and help create better financing conditions for smaller companies.

Despite leading the world in exports of goods, demand within Germany has stagnated for years. Analysts blame the surge in unemployment for unsettling consumer spending.

Juergen Thumann, head of Germany's BDI industry federation, said the jobless rise would stop once the new reforms were in place, paving the way for new job creation.

"If the results of the job summit become law quickly, new jobs can be created in the second half of this year," he said.

Others warned that Germans still needed to come to terms with the realities of mass unemployment.

- REUTERS