Bonn announces swingeing cuts in benefit payments: Unemployed, settlers and building workers are among those hit

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BONN - Germany's ruling coalition parties announced a wide range of cuts in social spending yesterday, after talks continued until late on Monday night, writes Steve Crawshaw.

The cuts affect unemployment payments and dozens of other benefits. Thus, for example, 'bad-weather' payments for building workers will be scrapped; money for ethnic Germans (from Poland, for example) settling in Germany will be cut from 15 to six months; civil servants' salaries are to be frozen; spending on job-creation schemes is to be reduced. The cuts will total DM21bn ( pounds 8.5bn) in 1994.

At a time when Germany is facing economic problems on an unprecedented scale, there is general agreement that something has to be cut, somewhere. But there is permanent disagreement about where the savings should be made. Yesterday's cuts are part of a series of changes, intended to help Germany cope with the effects of the recession; to free more money for eastern Germany; and, as importantly, to make Germany lean and fit once more, and to reduce the flab that critics believe is weighing down the country in its complacent middle age.

Earlier this year, a 'solidarity pact' - cuts in the west for growth in the east - was agreed between all the parties, after endless arguments; the disputes continued, even after agreement was theoretically reached. The latest proposals seem likely to be argued over just as bitterly. Rudolf Dressler, of the opposition Social Democrats, said yesterday that his party would 'completely reject' the package. He accused the government of trying to push its financial problems on the workers, and complained that it was wrong that 'the safety belt' of the welfare state should be removed, at a time of unemployment and recession.

The social cuts are just one aspect of the changes now on the way. One much-discussed proposal in recent weeks has been to increase the working week, to 40 hours. Businessmen and government politicians complain that the working week is too short, and that wages are too high. (Critics, by contrast, say that increasing the working week is pointless when there is not enough work to go round.)

The problem of high German labour costs has become especially acute as a result of changes in eastern Europe. As Der Spiegel notes: 'The Germans have to share their labour with producers who can make things more cheaply. In the metal industry, one working hour costs DM45 ( pounds 18) in Stuttgart, DM4.50 in Hungary, and 45 pfennigs in Estonia.'