[A-List] Germany: economic restructuring

["Michael Keaney" <michael.keaney@xxxxxx>]

German super-ministry for labour and economics
By Haig Simonian in Berlin
Financial Times: October 8 2002

Wolfgang Clement, premier of North Rhine-Westphalia, is to head a new German
labour and economics "super-ministry", in the first big political surprise
since Chancellor Gerhard Schröder won last month's general election.

Mr Clement has a reputation as a tough politician and strategist, who has
tried to combat decline in traditional industries in Germany's most populous
region.

He will replace Werner Müller, the non-partisan economics minister, and
Walter Riester, the former trade union leader who took over the challenging
labour portfolio when Mr Schröder took office in 1998.

Business representatives welcomed the move to merge the two ministries as a
step towards streamlining economic management and addressing Germany's
serious structural problems.

"Wolfgang Clement is highly competent in economic policy and valued by
business as a partner," said Ludolf von Wartenberg, managing director of the
BDI industry federation.

However, there were doubts that Mr Clement, one of the central figures in
the governing Social Democratic party, was a sufficiently convincing force
for change. A former journalist, he made his name as adviser to Johannes
Rau, the former longstanding North Rhine-Westphalian premier and now German
president, before becoming state economics minister, then premier.

Officials in the SPD stressed Mr Clement's high standing with both business
and unions and his achievements in restructuring the North Rhine-Westphalian
economy. The state of 18m has tried to remain competitive in traditional
manufacturing sectors while encouraging the development of new media,
computer and biotechnology companies.

However, Mr Clement, 62, has struggled to achieve the same results in much
of the industrialised Ruhr region.

Reserved and thoughtful, rather than charismatic, he may also have trouble
pro- jecting a strong image in his new job - which may be essential to
overcome likely serious resistance to significant change among Germany's
entrenched lobbies.

Mr Clement's prime task will be to cut unemployment, now more than 4m, and
promote essential reforms of the labour market. His first priority will be
to implement the changes proposed by the Hartz commission, set up this year
to recommend improvements in the state-administered job placement agency.

However, SPD reformers believe the changes should stretch to an eventual
"Hartz plus", opening the door to liberalisation of the notoriously
regulated labour market. Such measures could also include steps to
streamline the cumbersome social security system to lower costs.