Blog Carsten Brzeski

Germany: Reform reversal?

While political observers are still discussing the surge of the SPD’s Schulz in the polls, the SPD yesterday presented the first details of its planned strategy back to its leftist roots.

The warming-up and ballyhoo to the September elections is gaining momentum. While German politics and political observers are still trying to understand how the Social-democrats (SPD) could gain more than 10 percentage points in the opinion polls, the SPD’s new front-runner and hope, Martin Schulz, has started to add substance to his race for the chancellery.

Since the announcement that Schulz would be the SPD’s candidate for the September elections, Schulz has started to move the SPD back to its leftist roots. He frequently stated that some reforms of the labour market, implemented with the so-called Agenda 2010 under former Chancellor Schröder, should partly be reversed. Yesterday, the SPD presented first details of its plans to reform the earlier reforms. The SPD wants to give the unemployed the right to attend vocational training, which would extend the duration of unemployment benefits to up to two years. Currently, unemployment benefits stop after one month.

Yesterday’s proposal is the SPD’s first concrete plan to partly reform Schröder’s labour market reforms of the mid-2000s. These reforms eliminated social benefits and deregulated the labour market. Schröder’s reforms prepared the grounds for the current strong labour market performance, reducing the number of unemployed from more than 5 million to less than 3 million. Still, as so many social-democratic parties all over Europe, the SPD has always had a love-hate relationship with these reforms.

In the upcoming election campaign, Germany will now probably experience an almost ironic controversy on the reforms of the 2000s. Merkel and the Christian-democrats will defend the reforms and point to the current strength of the economy, even though they were in the opposition back then. At the same time, Schulz and the Social-democrats will have to explain to the voters why they now want to reform the reforms, even though they have been part of the government in 16 out of the last 19 years.