Although Gerhard Schroeder's election as Germany's Chancellor won't be official until Oct. 14, there's no doubt that the Social Democrat will replace Helmut Kohl, a Christian Democrat who presided over the reunification of Germany during his 16 years in ...
Although Gerhard Schroeder's election as Germany's Chancellor won't be official until Oct. 14, there's no doubt that the Social Democrat will replace Helmut Kohl, a Christian Democrat who presided over the reunification of Germany during his 16 years in office. Germany's economic future is a question mark, however. The world's third richest industrial economy, after the U.S. and Japan, Germany is saddled with unemployment close to 11% (17% in eastern Germany), a government-run pension system that consumes nearly 11% of gross domestic product, the world's highest corporate taxes, and labor rates running $32 an hour. Schroeder, who as a local politician sat on the board of Volkswagen AG, is well aware of German industry's competitiveness issues. Indeed, he's regarded as somewhat pro-business. But, Germany's Greens Party, which Schroeder wants to bring into his government to strengthen his political base, is not likely to accept sweeping tax and labor-law reforms. And without reforms, Germany's competitiveness (rated No. 24 among countries in a 1998 World Economic Forum survey) could fall further. Under Germany's constitution, negotiations with the Greens could go on for most of the next month.
