German Chancellor Merkel suffers setback on welfare reform

German Chancellor Merkel suffers setback on welfare reform

2011-02-12 00:50:29 GMT+7 (ICT)

BERLIN, GERMANY (BNO NEWS) -- German Chancellor Angela Merkel on Friday suffered a set back on her proposed welfare reform after the parliament referred the plan back to negotiations, the DPA news agency reported.

Merkel's party, the Christian Democrats (CDU), and their allies were one vote short in the upper chamber of the parliament (the Bundesrat) to pass the reform that intends to increase welfare payments by 5 Euros ($6.78) per month.

The increase has been rejected by the center-left opposition. The negotiations have lasted seven weeks and no agreement has been reached. On Thursday, it was rumored that Merkel will trade ground on labor laws for the welfare reform.

However, after Friday's straw poll it was demonstrated otherwise and the German government dropped plans to put the issue to a vote in the Bundesrat. Instead, the upper chamber of the parliament referred the issue for a second time to the reconciliation committee.

The committee will study the situation in order to overcome differences in the Bundesrat. The reform proposed by Merkel received renewed backing from the lower house of parliament (Bundestag) where CDU and its allies enjoy a solid majority.

The proposed reform will increase the current monthly payments to 364 Euros ($492). Approximately 4.7 million jobless Germans enjoy welfare benefits on top of rent, heating, child allowances and social-insurance contributions.

In February 2010, the reform became necessary after the Constitutional Court ruled that the existing welfare payments, known as Hartz IV, were not properly calculated. The Court set December 31, 2010, as deadline for payments to be made on a new basis.

The government failed to reach an agreement at the deadline after opposition parties rejected Merkel's proposed increase. As the government failed to get its reform approved, the whole process of negotiation will have to start again.

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