GEE, TRADE UNIONISM HAD MADE THEM SO COMPETITIVE...:

Conservatives make pitch to Germany's center (Judy Dempsey, JULY 12, 2005, International Herald Tribune)

Angela Merkel, the conservative opposition leader who is trying to become Germany's first woman chancellor, made a big push Monday to win back liberal middle class voters who helped in the election victories of Gerhard Schröder's Social Democrats in 1998 and again in 2002.

In announcing plans for a series of tax incentives, a simplified tax system, less bureaucracy and what they termed a more balanced foreign policy, Merkel's conservative Christian Democrats and their sister party in Bavaria, the Christian Social Union, sought to regain the center of German politics.

In contrast, the program presented by Schröder's Social Democrats was a pitch to its left wing and particularly its traditional trade union supporters. [...]

A confident, businesslike Merkel spent nearly two hours discussing in detail the party's program and answering questions from a packed conference hall of journalists in the heart of Berlin's government quarter. She was flanked by Edmund Stoiber, leader of the Christian Social Union who was narrowly defeated by Schröder in 2002 and who until a few months ago was Merkel's main rival.

The manifesto has five main elements:

Easing the income tax burden.

The basic rate of income tax would be reduced from 15 percent to 12 percent, and the top rate would decrease from 42 percent to 39 percent. The value-added or sales tax would increase from 16 percent to 18 percent. Tax benefits for commuters, holiday and night shifts would be reduced.

Schröder was quick to criticize the tax proposals. "Under Mrs. Merkel, everything will be more expensive and nothing better," he said. "You can see that the plan to raise sales tax affects families with children and people with small pensions."

A more flexible labor market.

Companies employing as many as 20 people would be able to hire and fire more easily. Schröder's Social Democrats had limited such flexibility to companies with 10 employees.

Employers and employees would have more freedom to set their own wage levels, rather than be restricted by special wage accords.

Companies would be allowed to employ more part-time staff members - particularly people with children - and more temporary workers.

Jürgen Thurmann, chief of the Federation of German Industry, which represents employers, described the manifesto as "sober and realistic."

"If all this is implemented, citizens and businesspeople can regain trust in German economic policy," he said.