GERMANY: The German government has defended a controversial plan to raise the retirement age to 67 sooner than scheduled and announced plans to rework economic reforms of the Schröder government after a critical parliamentary report.
Last week labour minister Franz Müntefering announced that the government wanted to increase the retirement age from 65 to 67 in stages from 2012 until 2029, six years earlier than planned.
"We are on the right course," said Mr Müntefering in the Bundestag in Berlin yesterday, defending the age increase as "unavoidable" for the security of Germany's pension system.
Leading economists have backed the government's plan to increase the retirement age earlier than planned in the face of a dramatically ageing society, but opposition politicians attacked the plan as a political sleight of hand.
A newspaper report pointed out that many German work contracts specify a retirement age of 65. If an employee leaves their job at 65 but is entitled to receive a pension only at 67, their pension could drop significantly unless they find work for the intervening two years and continue to make pension contributions.
"This isn't an attempt to increase the pension age but to cut pensions," said Oskar Lafontaine, parliamentary leader of the Left Party and former SPD finance minister.
Yesterday's parliamentary debate was marked by surreal moments, such as when Christian Democrat (CDU) members of the grand coalition government praised the "solid work" of the Schröder government and the reforms they had attacked with gusto over the previous three years.
An interim parliamentary report on the so-called "Hartz" reforms criticised ineffective measures to get back to work long-term unemployed and over-50s, and praised measures to encourage self-employment that have since been abolished.
Mr Müntefering said the report contained "light and shadows" and announced plans to reform the reforms next year.
The opposition Free Democrats (FDP) said the report documented "the failure of the SPD-Green labour market policies".
"With five million unemployed in January, you have to ask whether any far-reaching reforms happened at all," said Dirk Niebel, FDP labour spokesman.
Left Party MP Katja Kipping reminded the Bundestag that the aim of the Hartz reforms was to halve German unemployment. She said the five million still out of work and two million in state-sponsored job programmes meant the reforms should "be filed away in the fairytale folder".
That doubt about the effectiveness of Germany's reforms is reflected in a special report in the Economist this week, titled "Waiting for a Wunder".
Just months after lavishing praise on the country, the magazine said "Germany today is like one of those pictures where, depending on how you tilt it, you see two different images".