Minister President Peer Steinbrück at IZA Tower Talk: Germany is not a bazaar economy!
|
At the IZA Tower Talk on January 12, 2005, the Northrhine-Westphalian Minister President Peer Steinbrück gave a speech on the topic "Between welfare state and bazaar economy: The future of social labor market policy in Germany".
|
|
|
He underscored the need to vigorously pursue the "Hartz" reforms, calling them the most far-reaching labor market and social policy reforms in post-war Germany. But he also warned not to expect short-term employment effects from these programs. Steinbrück harshly criticized the tendency of the German public to resort to the "vale of tears" and called for more optimism in modernizing society and economy. He praised the recent achievements in such fields as tax reform, which he deemed successful, even in an international comparison, although he referred to the 1990s as a "lost decade".
|
Educational policy is at the core of Steinbrück's reform proposals. The goal should be to lower the average age of job market entrants and to improve the job prospects of low-skilled workers through education and training. At the same time, Germany should counter the demographic decline by tapping unused human capital potential, such as the group of high-skilled young mothers, through better childcare facilities.
|
Steinbrück was avidly opposed to the "bazaar economy" theory, which holds that Germany suffers from globalization as the country's export balance increasingly contains assembled products for which parts were previously imported from low-wage countries. He pointed at Germany's distinctly positive trade balance with Eastern Europe. According to Steinbrück, there is no reason to be pessimistic as Germany stands to profit from a more intensive division of labor, particularly with the new EU member countries.
|
|
|
|
In the subsequent discussion with Hilmar Schneider, IZA Director of Labor Policy, Steinbrück rejected the call for additional tax breaks. Instead he pleaded for using a larger share of tax revenues to pay for social security in order to take some of the financial burden off the labor market. The Minister President explicitly lauded the IZA research activities and the institute's contribution to the scientific evaluation of the "Hartz" reforms.
|
|
