Where Now for European Social Democracy? - Policy Network

ANGELICA SCHWALL-DÜREN 45jobs and greater fairness between generations. And to have the powerto implement it.The so-called Agenda 2010 is the German roadmap for achieving allthese different goals. It is in line with the recommendations of theCommission and the Ecofin Council, and contains a mix of structuralreforms to social security systems and the labour market (the Hartzreform, health reform and pension reform), as well as long-termmeasures to reduce the national debt and promote fiscalconsolidation. I believe that these reforms are essential if we are tomaintain our living standards and ensure our social security systemsfunction in the future under the conditions to be expected in a societywith an ageing population.In addition, the decision to implement the next step of our reformof the tax system one year earlier will – temporarily – reduce our publicincome and lead to higher borrowing. But we are convinced that thesemeasures will support economic growth and private consumption, andas a consequence will lead to higher incomes and improved fiscalconditions. And this kind of flexibility of the Stability and Growth Pactshould be accepted. When the proposals of the European Commissiongo in this direction, then – I think – we would be able to agree.However, the political situation in Germany – in a federal systemwith an SPD-Green majority in the Bundestag and a CDU/CSU majorityin the Bundesrat – the council of constituent states – makes it rathercomplicated to implement the whole reform package. Therefore, wehave established a commission for the modernisation of our federalsystem.There is no way back – we have to proceed with reforms now – ina situation of weak economic growth, high unemployment and ongoingfiscal problems, and we are ready and willing to continue this way. Andthe clear voting and the broad consensus in the German Bundestag lastyear concerning the social security system reforms – especially onhealth and labour market reforms – made clear that the nationalparliament is willing and able to proceed with the necessary reforms.Now we have to reflect on the next reform steps: how can weimplement further necessary reforms without overstretching the socialcohesion of our society? How can we better explain what we have to