ABSTRACT

On 16 June 1996, 350,000 people from all over Germany followed the trade unions’ call and congregated in Bonn to demonstrate against the government’s proposed reforms of the German welfare system. The immense costs of unification, recession or slackening economic growth in many export countries and increasing globalisation of economies have plunged the state into deficit. The economy which up to the late 1980s had gone from strength to strength now faces a serious crisis. Economic growth has remained below that predicted, unemployment has been rising, and public debt has increased to such an extent that Germany may be in danger of not meeting the criteria for the European Single Currency. While some experts warn of structural problems and others point to the ever-increasing involvement of the state in the economic process, both groups agree that far-reaching reforms in the public and the private sectors are the prerequisite for a successful way out of the crisis.