SPD Urges Merkel To Back Tighter Market Rules

The SPD is pushing for more aggressive steps but is meeting resistance from Merkel`s conservatives.

Germany's Social Democrats demanded curbs on executive pay and tougher market rules at the weekend, raising pressure on Chancellor Angela Merkel before she meets coalition party leaders to consider policies this week.

With an eye on September's election, Merkel's conservatives and her Social Democrats (SPD) coalition partners are trying to show voters they will not let another financial crisis occur and that they are committed to social justice. Measures under consideration for Europe's biggest economy include an extension of the time period in which managers are prevented from exercising stock options and making supervisory boards responsible for exorbitant remuneration packages.

The SPD is pushing for more aggressive steps but is meeting resistance from Merkel's conservatives. Last week, leading SPD ministers proposed a tax on stock market trading that they hope can be applied across the EU.

SPD Chairman Franz Muentefering said Wednesday's meeting of party leaders would include discussions on limiting pay, the accountability of managers, the introduction of inspections for financial products and measures against tax havens.

"We need tougher rules, and quickly," he told Der Spiegel magazine. "The coalition must do this before the election," he said, adding if the conservatives refused to cooperate, the SPD would campaign hard on the issue.

He even suggested higher taxes for wealthier Germans.

"The rich will have to pay more, otherwise we won't get the money needed for the solidarity of the social state," he added.

Foreign Minister Frank-Walter Steinmeier, the SPD candidate to challenge Merkel for the chancellorship, said it was crucial to show that politicians had learnt the lessons of the crisis.

"This is about fairness in our society," Steinmeier said, adding he thought Wednesday's meeting could agree on executive pay, but that issues like a tax on stock market trading would be more difficult.

Merkel has long talked about tighter financial market regulation, but some in her party are against too much regulation and still believe firmly in the supremacy of the market.

Conservative Economy Minister Karl-Theodor zu Guttenberg rejected SPD demands for higher taxes for the rich and a tax on stock market trading.

"I simply do not understand how, at this time, one can agonise over new taxes," Guttenberg told Bild am Sonntag paper.

He also urged the SPD to agree to conservative proposals for shareholder meetings to agree on salaries of top managers. The SPD wants supervisory boards, which it argues are not as oriented towards short-term profits, to decide.

The sacking of a Berlin cashier from a supermarket after 31 years of service after her employer accused her of stealing 1.30 euros has dominated German newspapers in the last week and fuelled the debate about unchecked capitalism.