Chancellor Angela Merkel's fractious coalition faced a fresh test today over its income policies for German students and parents, after weeks of rancour over coming welfare cuts, according to dpa. Now at stake are Germany's generous handouts to parents in the first two years after a child is born as well as its means-tested income support for students from poor homes. Both are largely paid for from the federal budget. The upper house of parliament rejected Friday a bill sponsored by Merkel's Free Democrat (FDP) coaltion allies on a university scholarships programme that would have introduced grants for all students, even those from affluent homes, provided they gained high scores. The programme had been criticized as discriminatory to the poor. In the upper house, representing the 16 states, the opposition and Merkel's own Christian Democrat allies balked. Sources said 15 states voted against the bill, meaning it must now be studied by a reconciliation panel of the two houses. The move was a blow to the FDP. FDP officials at the same time were calling for changes in Germany's parental-leave legislation. Merkel was not in the country to hear the complaints, since she was attending the G20 and G8 summits in Toronto, Canada. She has already been accused of harshness over plans announced June 7 to trim payouts to 7 million Germans on long-term welfare. Currently, mothers or fathers can claim loss-of-pay compensation during parental leave from employers. The government pays a similar sum to parents in the ranks of the long-term unemployed, but says it will soon dock this under the deficit reduction plan. The FDP's caucus leader, Otto Fricke, said income compensation should be limited to people who actually had employers. He was implicitly arguing that the grant, starting at 300 euros (368 dollars) monthly should be denied to students and the short-term unemployed, who are not affected by the 80-billion-euro savings plan. In a news interview, he said, "Parental-leave grants should be concentrated on those who were working before the birth or before the previous spell of parental leave." Another caucus member, Miriam Gruss, said it was defined as a salary-substitution grant only. German Family Minister Kristina Schroeder of the CDU, whose ministry administers the grants, rejected the call. "Families need dependability, not a new money-saving idea every week," she said. She added that the more limited cut to parental- leave grants had been unanimously approved in cabinet as a package.
