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Politicians reject mooted unemployment insurance hike

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Politicians reject mooted unemployment insurance hike
Unemployed people waiting in line at the unemployment office. Photo: DPA
08:58 CET+01:00
Senior government figures spoke out against a spike in the contribution German workers pay towards unemployment insurance on Wednesday, as a whirlwind of debate raged over how to get the nation's finances back under control.

Following a report Tuesday morning in daily Süddeutsche Zeitung that the government was considering a rise from 2.8 percent of workers' gross income to 4.5 percent, politicians from the conservative Christian Democrats (CDU) and pro-business Free Democrats (FDP) spoke out against such a move.

The paper reported that the possibility had already been discussed by the CDU and FDP in their coalition negotiations following September's election victory.

The increase would mean a major dent in workers' take-home pay. It was not clear whether the contribution paid by employers – which is currently matched to the workers' rate at 2.8 percent – would also rise. If it did, it would make hiring workers more expensive and likely push up unemployment.

Hans-Peter Friedrich, chairman of the parliamentary group for the Bavarian conservatives, the Christian Social Union, said Wednesday morning that he was steadfastly against any increase.

“We must all be wary of making work in Germany more expensive,” Friedrich said.

However, the budget expert for the CDU's parliamentary group, Norbert Barthle, carefully avoided ruling out a raise in the unemployment insurance contributions.

The chairman of the CDU's committee for small business, Michael Fuchs, warned that a rise of just 1 percentage point to employers' contributions would wipe out about 120,000 jobs.

The government is desperately looking for ways to slash the huge deficit after taking on unprecendented levels of debt to drag the economy out of its worst downturn since World War II.

Finance Minister Wolfgang Schäuble is aiming to reduce the deficit by €10 billion a year between 2011 and 2016 and has foreshadowed a strict belt-tightening programme though he hasn't explained where cuts – or tax rises – might be applied.

Martin Kannegiesser, president of the metal industry employers' association Gesamtmetall, told daily Bild that if necessary, tax cuts should be put on hold until the nation's finances were back under control.

And the Minister for economic cooperation and development, Dirk Niebel, called for aid payments to be cut back in an interview with the Hamburger Abendblatt.

The acting head of the opposition Social Democrats (SPD) parliamentary group, Hubertus Heil, accused the government of trying to deceive voters on the issue, daily Kölner Stadt-Anzeiger reported.

And the president of the CDU's business council, Kurt Lauk, told news magazine Der Spiegel: “Save, don't raise – that's our motto.”

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