August 4, 2002	Sunday	Jamadi-ul-Awwal 24,1423

BERLIN, Aug 3: The head of a commission to reform Germany’s labour market is proposing a 150 billion euro plan financed from the capital markets to create about a million jobs, Spiegel magazine said on Saturday.

We have developed a forward-looking financing concept to use 150 billion euros in three tranches for employment and investment, Peter Hartz, personnel director at car maker Volkswagen, and head of the so-called Hartz Commission said in an interview in Spiegel.

The money would come from paper issued by German development bank Kreditanstalt fuer Wideraufbau to the capital markets with tax benefits for investors. This would not affect Germany’s debt position and its euro zone deficit commitments.

Any firm that takes on an unemployed person would be able to draw from this large fund, Hartz said, adding it would particular stress the economically-backward eastern states.

Chancellor Gerhard Schroeder appointed the committee in February to propose radical reform of the way Germany’s Federal Labour Office works following a scandal over bloated job placement statistics and gave it a mandate to report just before the September 22, general election.

Hartz’s commission is to present final recommendations on August 16, although some committee members say deep divisions on key issues remain ahead of a last meeting on August 9-10.

The timing has ensured the committee’s ideas have dominated early stages of the campaign, and helped turn attention away from the reality of rising dole queues.

Unemployment was 3.954 million in June, 1.394 million in the eastern states, and the head of the labour office, also a member of the Hartz committee, said on Wednesday there were no grounds to be optimistic about July data due out on Wednesday.

Schroeder said on the campaign trail in 1998 the Social Democrats would not deserve to govern if they could not significantly cut unemployment — a soundbite the opposition is now playing back over telephone hotlines.

Schroeder’s conservative challenger Edmund Stoiber has pointedly steered clear of setting a target for unemployment, but has promised to devote two billion euros to addressing eastern Germany’s ills. He has a 10 billion euro programme to cut doles cues in Germany as a whole.

Opinion polls show the opposition with a clear lead with seven weeks to polling day.

Schroeder has scheduled a meeting of senior Social Democrats for August 18 to consider how to implement the report. He has promised its ideas will be taken on board as a whole and implemented as quickly as possible.

But the trade unions and some Social Democrat backbenchers have reacted coolly to Hartz’s ideas, such as cutting unemployment benefits and fostering low-wage jobs.

In an interview in Saturday’s Sueddeutsche Zeitung, Hartz said he regretted that the commission’s ideas had become an election football, insisting it was an apolitical body.

Hartz said his commission had largely agreed to propose lowering the protection against dismissal for temporary employees. Regulations on temporary employment agencies could ease, allowing them to take on workers on a trial basis

We will make temporary employment more attractive than it is now he said.—Reuters