German "wise men" warn against generous social measures

Reuters News
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Posted: Nov 13, 2013 3:44 AM
German "wise men" warn against generous social measures

BERLIN (Reuters) - Germany's "wise men" panel of economic advisers warned on Wednesday that measures politicians are currently discussing in coalition negotiations such as hiking low pensions threatened to undo the years of gains from painful labor market reforms.

"Measures currently under discussion, such as the mothers' pension, raising low pensions and allowing broad exemptions to the new retirement age of 67, will largely be shouldered by future generations," they said in a report.

Reforms to the labor market and social system unveiled by Gerhard Schroeder, Merkel's Social Democrat (SPD) predecessor, back in 2003 and known as "Agenda 2010" have been widely credited with boosting German competitiveness and fuelling the country's economic success.

"Future challenges will be far more difficult to overcome if the Agenda 2010 reforms become diluted or reversed in some cases," the report stated.

The panel of economic advisers has revised up its estimate for growth in Europe's largest economy this year to 0.4 percent from its March estimate of 0.3 percent. The government predicts growth of 0.5 percent in 2013.

The panel, which also includes a woman, expects growth of 1.6 percent in 2014, compared with the government's forecast of 1.7 percent.

(Reporting by Michelle Martin)