Kohl Seeks Wider Weave in German Social Net

For years, German workers have been able to earn more on sick leave than in a normal work week.

Chancellor Helmut Kohl says that's got to stop.

Klaus Zwickel, head of IG Metall, the world's largest industrial union, says the sick-pay deal was won after a hard-fought strike in 1957. If the government pushes too hard, he has hinted, the union may have to strike again.

Meanwhile, the six leading German economic institutes have blasted the government for not pushing hard enough.

Germany is not France, which went through major strikes last year as the government there moved to cut back social benefits to facilitate France's entry into the European currency union. German trade unions pride themselves on their willingness to cooperate as much as their French counterparts pride themselves on their readiness to confront.

But protest rallies across Germany yesterday, the traditional May 1 "labor day" in Europe, showed how strongly labor sentiment runs against Mr. Kohl's economic program.

The program is intended to get Germany into better fiscal shape for the currency union, as well as fight unemployment. But the unions accuse the government of dismantling the social-safety net. "They can't treat us like that!" Walter Riester, IG Metall's No. 2, insisted in a speech at the Old Market here in Cologne.

Labor is ready to protest

Earlier, ambling along at the head of a column of, by police estimates, 1,500 peaceful marchers, he said, "Because the proposed cuts are so deep and so broad, we're seeing a whole new level of mobilization for protest." During his speech, he suggested that the Oct. 3 "Unity Day" holiday be observed as a day of defense of the welfare state.

Although Chancellor Kohl's Christian Democratic Party is generally described as "conservative," it prides itself on its support for a social-welfare system that goes back to the 19th century. It might strike some Americans as "socialist." But high labor costs, particularly nonwage labor costs, have made job creation expensive. Unemployment is more than 10 percent, a postwar high.

Thus Kohl wants to do something about the sick-pay system. Because recent overtime is factored into sick pay, it is possible for a worker to be paid more while out ill than while on the job in a month with little overtime. Employers say they notice increased use of sick leave after a run of high overtime.

Unions contest this. "It should be a matter for the doctors to decide. Either the guy is sick, or he isn't," said a union member waiting for the march to begin. The government proposes to cut sick pay back to 80 percent of normal wages, which has drawn thunderbolts from the union leadership.

Another target of the Kohl program is the "layoff protection" law that sets out a "due process" for layoffs that people view variously as either protective or restrictive. The law keeps employers from dumping workers but also makes it harder to negotiate wage concessions. This pushes financially troubled firms toward extinction rather than restructuring and salvage.

Less time for 'rest cures'

The law now applies to firms with five employees or more; the new program would raise the threshold to 10.

German workers are also entitled to a four-week "rest cure" vacation every three years, in addition to regular annual vacation, typically six weeks. Under the Kohl program, "rest cure" will be allowed only every fourth year.

The opposition Social Democrats have called the government program "socially obscene."

Wolfgang Schuble, head of the Christian Democrats in the lower house of parliament, has called the package the most significant fiscal consolidation "in 10 or 20 years." The program includes tax changes, efforts to make it easier for entrepreneurs to launch new firms, tweaks in the pension system, and a host of other measures. These reforms are months away, at least, from becoming law - if the chancellor can find enough votes for them.

The six leading research institutes, which issue joint reports, blasted the program Monday as insufficient and weighted in favor of consumption and subsidies at the expense of public investment.

Though it is unclear how far Kohl will get with his program, analysts are generally giving him credit for taking meaningful action and for being willing to face down the unions. "This is clearly a fairly unprecedented situation," says one highly regarded economic analyst who nonetheless seems too uncertain about the outcome to be quoted by name.