Disputes remain in German coalition despite progress

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BERLIN, Nov 13 (Reuters) Germany's ruling coalition of conservatives and Social Democrats succeeded today in resolving disputes over several policies though disagreements remain on some of the thorniest issues.

The latest round of coalition talks, which picked up from last week's unsuccessful discussions, were widely seen as a test of conservative Chancellor Angela Merkel's resolve to resist a shift to the left by her Social Democrat (SPD) partners.

The unresolved issues include a minimum wage for employees of German postal and logistics firm Deutsche Post, the partial privatisation of state rail operator Deutsche Bahn and childcare benefits.

''At this point there will be no minimum wage for (Deutsche) Post,'' SPD chairman Kurt Beck told reporters after six hours of talks between his party's leaders and the conservatives that began yesterday evening.

The mood inside the coalition after their failure to agree on this issue ''has definitely not improved'', he added.

The SPD has been pushing hard for this plan and would eventually like to see a universal minimum wage instituted across the European Union's biggest economy. Merkel's conservatives vigorously oppose this idea, arguing it would cost jobs and undermine Germany's economic recovery.

However, coalition officials told reporters the parties did manage to agree on an extension of jobless benefits for older people to 24 months from the current 18 months, something the SPD had been pushing for.

Merkel's conservatives also said they succeeded in persuading their centre-left coalition partners to help working families by slashing unemployment insurance premiums for all workers to 3.3 per cent of gross pay from 4.2 per cent at present.

The parties will have to come back to the issue of privatising German national railway and logistics firm Deutsche Bahn after considering a proposal to create a holding company for the firm's logistics operations and track network to keep them out of any sell-off.

According to this plan the part of Deutsche Bahn that would be privatised would include passenger and freight operations.

Miserable opinion poll scores, looming state elections and the challenge of the left-wing Left party have prompted SPD chief Beck to chart a new left-leaning course that has fuelled tension in the coalition.

Merkel says she will not reverse economic reforms and insists that cutting unemployment, supporting economic growth and maintaining solid public finances were her priorities.

A rolling-back of reforms in Germany, credited with supporting economic growth and boosting employment, could lead to a reversal of gains in competitiveness in the run-up to elections in 2009, analysts say.

Recent opinion polls put the conservatives on around 40 percent with the SPD trailing by as much as 14 percentage points and the Left party on around 10 percent.


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