IMF attacks Germany's labour policies

["Ulhas Joglekar" <ulhasj@xxxxxxxxxxxxxxxxxxxx>]

> 5 November 1999 : IMF attacks Germany's labour policies
>
> IMF attacks Germany's labour policies
> BERLIN: Germany's protective labour policies have come under sharp
criticism
> from the International Monetary Fund (IMF) with the government being
warned
> that they have worsened unemployment situation.
> The IMF board of directors in the annual review of the German economy
wanted
> the German government to make it easier for companies to hire-and-fire
> workers, according to an IMF survey on the German economy released
Thursday.
> The hire-and-fire approach has been called for on the grounds that
employers
> are not expanding their payrolls significantly under the country's
> protective labour policies, it said.
> On the flip side, the IMF predicted a ``reasonably bright'' outlook and
said
> the country's Gross Domestic Product (GDP) would grow at 1.4 per cent this
> year and 2.5 per cent in 2000. It also praised the administration for
steps
> to de-regulate the telecommunications and energy sectors.
> The German finance ministry in a response to the IMF projections said,
``the
> IMF's analysis confirms the government's expectations of a strengthening
> economy in the course of the year.'' Dealing with the unemployment
situation
> in the country, the global monetary body estimated that German joblessness
> will average 8.9 per cent this year and 8.5 per cent in 2000.
> An estimated four million of the 81 million people in Germany are
> unemployed. The IMF was critical of Berlin's decision early this year to
> raise taxes on part-time no fringe benefit jobs that companies had been
> creating to respond more flexibly to market conditions. The taxes on the
> part-time jobs and other labour changes had made part-time positions all
but
> extinct.
> The IMF directors ``were concerned that, in the absence of decisive
> labour-market reforms, Germany's medium-term macroeconomic prospects could
> again be undermined by labour shake-out, rising unemployment, and
eventually
> renewed fiscal pressures,'' the summary said.
> Berlin was also urged to prune the ``massive number'' of business
> regulations and to liberalise laws restricting what hours shops could be
> open. German lawmakers last week had stymied a move to abolish strict
store
> closing hours that critics say are an affront to consumers.
> Chancellor Gerhard Schroeder's centre-left coalition and the main
opposition
> Christian Democrats are opposed to free shopping hours arguing that it
would
> drive small stores out of business and undermine Sunday as a day for the
> family and going to the church.
> The pro-business opposition party Free Democrats are pushing for measures
to
> allow stores to open as long as they want on weekdays and left local
> authorities set rules for Sundays and holidays. Germany's legal store
hours
> are among the most restricted with shops currently allowed to stay open
> until eight in the evenings on weekdays and till four on Saturdays. Shops
> are closed on Sundays with minor exceptions. (PTI)
>
> For reprint rights: Times Syndication Service
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> Bennett, Coleman & Co. Ltd. 1999.
>