The re-election chances of Chancellor Gerhard Schroder of Germany are looking increasingly bleak as unemployment rises. Schroder blames September 11 for a slowing of economic growth to 0.75 percent. Public spending cannot be increased significantly because the rules of the euro monetary system mandate firm limits on budget deficits.

In response, the Chancellor has announced measures to help pay low-paid workers' dues to insurance and health funds, which can be as high as 20 percent of wages. The hope is that more unemployed people will be induced to enter the employed labor force in low-paid positions.

German employers have urged the liberalization of labor market regulations that make it costly to dismiss workers. They believe that archaic laws, red tape and high costs prevent foreign companies investing in Germany. However, Schroder has turned the appeals down, instead proposing to give unions more power in major companies.

The conservative opposition leader, Edmund Stoiber, advocates keeping foreigners out of the country. He would also reverse the phasing out of nuclear power, give tax cuts, and eliminate increases in energy taxes.

(Updated April 1, 2002)