The Social Democrats and their Green Party coalition partners were forced to take urgent action to deal with the pension system after it was revealed that it was facing an 8-billion-euro (US$9.3 billion) deficit next year.
The choice was essentially either trimming pensions or increasing wage-linked contributions to the pension, which could have placed at risk the government's pledge not to increase non-wage costs.
Economists see keeping the lid on Germany's high non-wage costs as crucial in the struggle to tackle the nation's high unemployment, which currently stands at 10.1 percent.
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