By Tom Gill
A loose left-wing alliance whose leaders include former German finance minister Oskar Lafontaine has finalised plans to run on a common platform in the general election expected in September.
The ex-communist Party of Democratic Socialism (PDS) and a smaller group of dissidents from the ruling Social Democrats are expected to merge after the election to become the third largest party in the German parliament.
The PDS, led by Gregor Gysi, decided at a conference on Sunday in Berlin to change its name to the Left Party.
Separately, the Election Alternative for Work and Social Justice (WASG), whose figurehead is Mr Lafontaine, a former SPD chairman, last Saturday endorsed the plan to campaign under the Left Party banner.
The challenge from the Left will further reduce the SPD’s chances of winning a third term.
It came as the ruling party made a bid to win back disillusioned voters with a manifesto that rules out student fees, a rise in retirement age and any overhaul of Germany’s consensual wage-setting mechanisms.
It also provides for an increase in taxes on earners of £166,000 a year, but this is unlikely to wash with voters since it follows a move to cut taxes on the rich at the start of the year. Moreover, the 43-page document does not reverse unpopular “flexible” labour market and welfare reforms that have hit living standards and job security while also failing to cut the record 5-million-long dole queues.
Angela Merkel’s Christian Democrat Union (CDU) and its sister party, the Bavarian Christian Social Union (CSU), are heading for a near-certain victory. Ms Merkel has been characterised as Germany’s answer to Margaret Thatcher, but businesses have criticised the CDU/CSU manifesto for failing to attack welfare, job protection and unions more aggressively.
Their manifesto calls for cuts in income-based social security contributions funded by a regressive rise in VAT, a decentralisation of wage bargaining and measures allowing companies with fewer than 20 employees to hire and fire workers more easily. It also promises a relaxation of legal protection against arbitrary dismissal in larger companies.
While Ms Merkel and Chancellor Gerhard Schroeder see cheap and compliant labour as the key to slashing unemployment, no party — not even the new Left Party — is challenging what is widely regarded as the main cause of German economic stagnation: the euro’s single European interest rate and the Stability Pact’s overly restrictive budget deficit rules.