Schröder Condemns Job Offshoring as Unpatriotic

Gerhard Schröder, the German chancellor, yesterday condemned offshoring, the transfer of jobs to low-cost labour markets, as "unpatriotic", raising the prospect of a political backlash against the trend.

The issue, a hot political topic in many countries, has so far not generated much public debate in Germany, despite companies shifting activities from manufacturing to software-programming to eastern Europe and Asia.

Speaking after a top-level meeting of his Social Democratic party in Berlin, Mr Schröder said offshoring reduced things that were necessary and important for Germany to "narrow microeconomic questions".

The comment came in response to an interview by Ludwig Georg Braun, chairman of the federation of chambers of commerce, in which he advised companies not to "wait for better policies [but to] act now and use the possibilities afforded, for example, by eastward enlargement [of the EU]".

A spokesman for Mr Schröder said the government would "have to discuss [offshoring] with business federations and trade unions. We have to draw conclusions."

Mr Schröder and cabinet ministers have been at pains to highlight their social credentials lately as they sought to deflect leftwing criticism of the government's painful social security and labour market reforms.

Yet government officials yesterday played down the risk of a populist turn in policies, saying offshoring could be best countered by structural measures that made Germany more attractive as a business location.

High non-wage labour costs needed to finance Germany's generous welfare state make German workers the most expensive in the world after their Norwegian colleagues.

Mr Schröder's government is under pressure to show that its reforms, including a relaxation of protection against dismissal, are encouraging job creation.

While unemployment has been declining since the second half of last year - a shift economists attribute to statistical effects - employment has kept contracting over the period, albeit with signs of stabilisation in the fourth quarter.

Siemens, Germany's largest industrial conglomerate, said yesterday it would talk to trade unions on March 30 about how to reduce labour costs in its German operation and prevent large transfers of jobs abroad.