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Red-Green Social Cuts

Future investment programs in important social areas like education, health care and ecology, redistribution from top to bottom, more public employment, reduction in working hours and abolition of overtime are all sensible measures for increasing employment that could have beent ackled by Schroder and Co. Instead the rich and corporations were relieved, state expenditures reduced, public investments eliminated, social cuts pursued and austerity policy..
Red-Green Social Cuts

That the German government plans future social cuts is as certain as the Amen in the church

By Alexander Recht

[This article originally published in: SPW-Rhld is translated abridged from the German on the World Wide Web,  http://www.linksnet.de/drucksicht.php?id=681.]

The wealth produced year after year in Germany is immense and distributed very unequally. A few rich gain very high incomes and possess great assets. Expenditures of the Labor Office for unemployment benefits and unemployment assistance should be cut 13 billion Euro from 40 billion Euro today, according to the Hartz commission. The poorest are crushed so the richest can live more comfortably.

The proposals of the Hartz commission include: generalization, lower and reduced duration of unemployment benefits, lower unemployment assistance to the income support level, consolidation of both benefits and tightening regulations as to offered jobs with reduced benefits upon rejection.

Tightened regulations means that unemployment benefits or unemployment assistance should be cut when claimants are not ready to accept jobs at a great distance to their residence, whose quality is poor or whose responsibility has nothing to do with their abilities. Thus a combination of reduced benefits and tightened repression is envisioned..

When victims become offenders or culprits

Clarity about the causes of unemployment is always important. The society in which we live is a capitalist society. Its central medium of control is profit, the maximization of exchange values. Social goals like full employment, justice, equality and environmental protection are completely alien to the self-regulation of capitalism.

Unemployment is a typical phenomenon of capitalist since competing capitalist enterprises pursue rationalization, replacing living work with labor objectified in means of production. Whether new products can compensate for this rationalization-conditioned unemployment is not clear. In the depression phases typical for capitalism, the consequences of over-accumulation and under-consumption are that production is scaled back and employees are released.

In short, the unemployed are victims of a social system that produces unemployment. With Schroder and Co., the unemployed are stamped as culprits or offenders and shamelessly slandered as rotten.



Red-Green errors in economic policy

Future investment programs in important social areas like education, health or ecology, redistribution from top to bottom, more public employment, reduction in working hours and abolition of overtime hours are all sensible measures for increasing unemployment that could have been tackled by Schroder and Co. Instead the rich and corporations were relieved, state expenditures reduced, public investments eliminated, social cuts pursued and austerity policy raised into a fetish.

That no successes in reducing unemployment can be recorded isn't surprising. The employment gap (including the silent reserve) amounts to 6.7 million persons is an evidence of social poverty by which Schroder can be measured. The volume of working hours, the actual demand for labor, at 56.9 million hours per year is about the same as 1998 with 56.7 million hours. In other words, more work has not been created. Many must set out for several part-time jobs! A radical abolition of unemployment cannot be achieved by continuing past policy.

"Promoting and Demanding" as the Wrong Way

Red-green now combats unemployment with the slogan "promote and demand", in other words by putting pressure on the unemployed. The assumption is that the core problem is deficient readiness of the unemployed to accept work. This assumption is the most brazen lie.

The problem of long-term unemployment persists. Long-term unemployment is bound with serious psychological problems, frustration, discouragement and de-qualification. Red-green makes this complex problem simple. Pressure and repression should force the long-term unemployed to work.

This is both asocial and completely ineffective. Working assistance and income support as need-oriented elements of basic security should be paid without conditions for reasons of human dignity and not cut. Unconditioned benefits support strategies of empowerment more than threatened cuts.

Repressive coercive measures and threatened withdrawal of benefits intensify social degradation and unequal opportunities. A social policy that first sets conditions and swings the menacing club of cuts in benefits transposes the unemployed and/or poor persons into the role of petitioners. This policy doesn't create the necessary trust in the welfare state since it doesn't strengthen the poor and unemployed in their role as sovereign persons with claims but unfortunately leaves the impression that these claims are dubious or questionable.

With a policy that creates sufficient jobs, anxious long-term unemployed must be empowered through long-term strategies to pursue paid work again. Instead of exposing them to repressions, small individual projects of empowerment tailored to the situation of the unemployed where the potentials of the unemployed are the starting point are vital..
Downward Pressure on Wages

Threatened cash-and-carry effects represent another central problem of the proposals. According to the plans of the Hartz commission, the Federal Labor Office should not offer its manpower in areas where employers are only ready to pay low wages. Wage components should be subsidized so that the total payment of wage plus subsidy corresponds to the lowest wage group.

However this is problematic for several reasons. Firstly, the Labor Office in this way could subsidize the profits of businesses because businesses only hire wage-earners even with wage subsidies when a profit is realized. A second objection is even more serious.

Exhaustive and unlimited subsidies in the low-wage segment lead to employers replacing working conditions in which standard wages were long paid with working conditions where personified capital pays its employees below scale and governmentally finances the difference to the standard wage. The pressure on wages is certainly clear. A wage reduction threatens because employers can argue: "Employees demand low wages because the difference to the standard rate finances the state!"

Since the wage structure is built on interdependent sectors and trained employees can be substituted with several less qualified employees, the whole wage structure threatens to sink downward. The low wage sector was even expanded.

First of all, the subsidization must be refinanced. This refinancing occurs from the contributions of employees that may have to be increased. A lower contribution is only supposedly against the neoliberal alarmism or anxiety psychosis. High non-wage labor costs are not a problem in principle. The use of the contributions representing a kind of social wage is crucial.

The business is the problem. The creation of new employment conditions is very trifling. The substitution of regular better paid employment conditions is more likely.

Contributing to profit subsidizing plus lower gross wages plus expansion of the low-wage sector without an unemployment effect makes no sense for the working class whose contributions reduce their net wage.

What does this mean?

Firstly, policy must make possible employment on the macro-economic plane by strengthening consumer demand, expanding public services and reducing working hours. Cooperative strategies should be applied with the long-term unemployed, instead of pressure and withdrawal of benefits. As a result, the proposals of the Hartz commission are fit for the historical waste-dump of rotten political concepts. Finally, the basic maxim is overcoming capitalism into a system where people form their conditions instead of being dominated by them.

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