In election year, Germany's Merkel slams SPD plan to revise labor reforms

STRALSUND, Germany (Reuters) - German Chancellor Angela Merkel hit out at her coalition partners on Saturday for proposing revisions to welfare reforms credited with driving the country’s economic success, ahead of elections in which their candidate has moved in front of her in some polls.

German Chancellor Angela Merkel speaks during the 53rd Munich Security Conference in Munich, Germany, February 18, 2017. Guido Bergmann/Bundesregierung/Handout via Reuters

The Social Democrats (SPD) have lagged Merkel’s conservatives in opinion polls for years. But support for the center-left party has surged since it nominated former European Parliament president Martin Schulz as its candidate in late January.

Schulz sought to appeal to the left of his party on Monday, saying corrections were needed to the “Agenda 2010” reforms, which were drawn up by former SPD chancellor Gerhard Schroeder but cost him his job and split the party.

The reforms, unveiled in 2003, saw many SPD members storm out and join the far-left Linke party.

But Merkel praised the program at an election campaign event in her constituency of Stralsund in northern Germany on Saturday, saying: “That’s why I said when I entered office 11 years ago that former chancellor Schroeder rendered great service to Germany with Agenda 2010.”

She said the conservatives had made some changes to the reforms since 2005, when they entered a coalition government, but had remained true to the core of the program because it had put more people in work, with the number of jobless halving since 2005.

“But to this day the Social Democrats don’t want to proclaim it as a success story,” Merkel said.

She said Germany needed to have a debate about an Agenda 2025 and accused the SPD of continually focusing on its past rather than looking to the future.

She said it was necessary to prepare Germany for a dramatic change via digitalization, and she called for research spending to be tax-deductible to encourage small firms to carry out more research.

In his speech on Monday, Schulz talked about protecting older workers as well as introducing restrictions on temporary job contracts and defending pensions. Employers say that could hurt the economy.

Schulz told the Redaktionsnetzwerk Deutschland media group (RND) that he expected a neck-and-neck race leading up to the Sept. 24 election.

“More than 20 percent of voters only decide in the last 10 days and 2 to 3 percent only on the election day itself. The result might well depend on this very 2 or 3 percent in the end,” Schulz said.

Reporting by Andreas Rinke; Writing by Michelle Martin; Editing by Hugh Lawson