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October 10, 2005

Good News from Germany

With a new "grand coalition" deal between the German Social Democrats (SPD) and Christian Democrats (CDU), it's become clear that while the conservative CDU got the chancellorship, the SPD won on key policy issues:

While the conservative and SPD parties will each have eight seats around a future cabinet table, the SPD won the right to name the key finance, labour and health ministers -- all but ending hope of radical changes in those areas, economists said.

"All-important structural reforms of the labour market and the social security system are clearly out of reach. Merkel will have to make concessions to an extent inconceivable only a few weeks ago," said HVB group economist Andreas Rees.

"It is time to say good-bye to an initially intended transition to a more flexible collective bargaining system and a reduction of non-wage costs for employers."

Yes, no "flexible collective bargaining" -- ie. undermining union power in Germany.

But the reality was that more than 50% of the Germany voters opposed conservative policies when you add up the SPD, Greens and "Left Party" votes, so the rightwing were always playing with a weak hand in these negotiations.

Posted by Nathan at October 10, 2005 11:19 PM