Thursday, May 7, 2009

In Europe, social safety net softens the slump


EPPELHEIM, Germany — With its tidy villages, orderly cities and atmospheric scenery, there are few outward signs that the German state of Baden-Wuerttemberg, home to historic Heidelberg and the famed Black Forest, is a victim of the current economic crisis.

But with the auto industry here hit especially hard — this is the home of Mercedes-Benz — things are tougher than they have been in decades. Unemployment is up 70 percent in the past year (albeit to a relatively low 5 percent total) and many employees have been forced to cut down their hours.

Misery below the surface, perhaps? Not at the bustling Fuerstenberger home just outside Heidelberg, where little has changed for the family's four children despite neither parent currently working.
“If we were in Detroit, we could worry every minute,” said Sarah Fuerstenberger, 37. “But here, we’re safe because of the system."

While economic forecasts are just as dire on this continent as in the United States, Germany’s citizens — and, indeed, most across western Europe — can count on a broad government safety net that includes generous unemployment checks, universal healthcare and inexpensive university education to tide them over.

“The German government is really good about taking care of people; we know we won’t be starving one way or another," she added.

With "Jobs Bloodbaths" in the headlines, tax money being used to bail out private banks and iconic car companies such as Britain’s Mini, France’s Renault and Italy’s Fiat laying off thousands, news here is similar to that across the Atlantic. Unemployment is also the same — around 8.5 percent across Western Europe and the United States.

However, Europe fiercely resisted President Obama's calls for it to increase its stimulus programs last month at the Group of 20 industrial and developing nations summit in London. That’s because leaders here argue that their existing social welfare initiatives are already keeping people afloat as well as stimulating demand.

Of course, these ongoing European programs come with a cost — higher taxes, which critics say can sap economic vitality.

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