GERMANY – Green Party chief Reinhard Buetikofer has voiced concerns that pensions reform in Germany has come to a standstill, as the government continues to debate proposals but avoids making final decisions.

The issue of whether keeping contributions as they will further damage funds, or whether contributions should be raised “has not been decided” social minister Ulla Schmidt admitted this week.

Similarly, on the subject of an increase in retirement age to 67, chancellor Gerhard Schroeder said yesterday in an interview with French television, that “it has still not been decided.”

Speaking on German television last night, the Greens’ Buetikofer criticised the government for dithering. He said: “I fear we are not getting anywhere.” He added that it was of concern that things were being looked at and discussed but nothing was being done.

Dresdner Kleinwort Wasserstein also published a research note today highlighting the slow pace of social reform in Germany, which may result in the country’s Triple A credit rating being put on negative outlook.

“Although the government is moving in the right direction, we have the impression that the rating agencies might become disappointed at the pace of implementation. Although the elections took place some time ago, no major reform steps have been implemented yet. The government is working on legislation, but the nature of Germany’s political system means this could take some time,” says the note.

Dresdner also adds that it does not feel the reforms go far enough to facilitate an economic turnaround. “While the current social security system is hampering the competitiveness of the German economy through a relatively high burden (29.5% of gross domestic product spent on social security in 2000, against a European Union average of 27%), uncertainty about the future also influences private consumption.”

“The general public are under no illusions that the current system is unsustainable, but it would help if people knew what to expect. In 2000, 42% of social security payments went into the pension system and 28% into health care (EU average 46% and 27% respectively). We believe the rating agencies would also welcome more rapid progress in terms of reforms.”


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