[A-List] Germany: looming class war

["Michael Keaney" <michael.keaney@xxxxxx>]

Harsh words for the unions
Top politicians attack labor for blocking reforms they say are needed to
create jobs
Frankfurter Allgemeine Zeitung Weekly, March 7 2003
By Michael Gavin

Two prominent German politicians have unleashed frontal attacks on Germany's
labor movement, using language that was unusually harsh by the standards of
a country steeped in consensus and usually wary of provoking open class
conflict.

The statements were not just spontaneous outbursts, either: When the Free
Democratic Party chairman, Guido Westerwelle, called labor unions "a plague
on Germany" on Monday, he was using exactly the same words he used last
month in a statement that his party later insisted had been taken out of
context.

Then, in an interview published in Der Spiegel on Monday, the Christian
Democratic Union's finance expert, Friedrich Merz, accused Germany's
coalition government of Social Democrats and the Greens of "eating out of
the unions' hand."

"The unions have to give up power and influence," he added. Asked if that
might provoke resistance, Merz added, "When you want to drain a swamp, you
don't ask the frogs."

Observers suggested Westerwelle and Merz might be attempting to exploit
perceived public exasperation with labor. Public workers forced through a
pay increase of 4.4 percent over two years in January despite an exploding
public deficit and warnings that their raises would make layoffs necessary,
while railroad workers began warning strikes last weekend to press for a 5
percent pay increase at a time when inflation is only about 1 percent and
economic growth is at zero or perhaps even in decline.
Merz and Westerwelle might also sense the unions are vulnerable. According
to the German Trade Union Federation (DGB), its membership has declined from
9.7 million to 7.7 million since 1994.

Certainly the DGB and its chairman, Michael Sommer, have made convenient
targets, as they have battled in recent weeks to stop proposed labor law
reforms. On Monday, Sommer walked out of a meeting of the Alliance for Jobs,
and later pronounced the joint forum of labor, business and government
"dead."

In another move that many saw as polarizing, Sommer said in an apparent
veiled warning to Chancellor Gerhard Schröder that anyone who cut social
programs and reduced job security for workers "should know that he will make
an enemy of the unions."

Westerwelle, meanwhile, said he was merely defending jobless people. He said
"millions" of them remained out of work because of outdated regulations
defended by the unions.

Merz made a similar argument, but found himself under fire from inside his
own party, which has traditionally worked to maintain the support of some
unionized workers, even if the great majority of them are SPD voters.

Hermann-Josef-Arentz, a deputy leader of the Christian Democratic group in
the German parliament, said Merz's comments were "way over the top in both
tone and content," and contrary to the principles of "a broad-based party
like the Christian Democrats."

A spokesman for the DGB, Marion Knappe, said that much of the criticism of
the unions was a result of news coverage that "portrays us as very, very
powerful" in terms of influencing the government. "Much stronger than we
really are," she added.

Knappe said the claim that the unions were hurting job creation by resisting
any loosening of job security laws in particular was false. The legislation
is not as inflexible as it is often said to be, and even when the unions
went along with a relaxation of it in the 1996-98 period, "it didn't lead to
more jobs," she said.

"Why should we give up job termination protection when we don't think it
will lead to more jobs?"

Knappe also rejected suggestions that the unions should have shown more
restraint in their wage demands in view of the country's severe economic
difficulties, saying union members' pay increases were providing much-needed
purchasing power in the economy and "have moved in parallel" with overall
economic growth in recent years.
The Social Democrats, meanwhile, were also angered at Merz's suggestion that
they are biased toward labor because 75 percent of their members of
parliament are union members. That is a "dangerous game," said the party's
deputy parliamentary leader, Ludwig Stiegler.
"This discussion reminds me of the final days of the Weimar Republic," he
said.

-----

Saving welfare state is a mission for Sommer
Chairman of German Trade Union Federation see threats to workers'
protections, benefits
Frankfurter Allgemeine Zeitung Weekly, March 7 2003
By Nico Fickinger
Frankfurter Allgemeine Zeitung

Before last September's federal election prominent members of all the
political parties were courting Michael Sommer, the titular head of the
German labor movement. After all, the reasoning goes, the man has 7.7
million votes behind him.

Life since then, however, has generally been less than pleasant for the
chairman of the Deutscher Gewerkschaftsbund, or German Trade Union
Federation (DGB).

First, Chancellor Gerhard Schröder, whose Social Democratic Party (SPD) has
close ties to the unions, ignored his advice and dissolved the Labor
Ministry, merging its functions with those of the Economics Ministry and
thereby taking a step that even Schröder's conservative predecessor, Helmut
Kohl, had shrunk away from.

Then, as part of the same cabinet shakeup, Schröder dropped Labor Minister
Walter Riester and Transportation Minister Kurt Bodewig, two former
full-time union officials. After that the new "superminister," Wolfgang
Clement, who is responsible for the mammoth new Ministry for Economics and
Labor, set out to abolish several of the labor movement's sacred cows, first
by liberalizing store closing hours and then moving to reduce job security
guarantees.

The unions fear that their treasured right to have a voice in company
policies could be next on Clement's list, which the unions fear is a long
one.

Such a difficult start, especially under an SPD government, is not what
Sommer expected when he took over his post last May. "There have been better
times," he acknowledged.

This 50-year-old unionist, who came up the hard way as the son of an
unmarried and impoverished mother in Berlin and then paid his way through
university with part-time work at the post office, remains a force to be
reckoned with and will not give up anything without a fight. Still, he did
feel compelled to call an end to the Alliance for Jobs, a tripartite effort
of the unions, business and government that he had keenly backed, and his
power inside the DGB is far from absolute; as chairman he merely presides,
and cannot give orders to the often independent-minded member unions.

Since the new year, especially, Sommer has clearly been on the defensive,
and has replied in kind. Clement, whom he suspected of making common cause
with the pro-business wing of the Christian Democratic Union, was one
target, as were Christian Democratic premiers who threatened to institute
more conservative policies. And he appears to see threats to his cherished
welfare state everywhere, not least in the proposals to eliminate some
services now paid for by the public health funds and require individuals to
get private coverage for them - measures that would cost most of his
membership money and others their jobs.

Arguments by critics that one of Germany's major economic problems is
bloated and inefficient public and social services, or that the costs of it
are driving up labor costs and destroying jobs, make little impression with
Sommer.

Germany's comprehensive welfare system is one of the country's greatest
accomplishments, he says, and the unions intend to "defend it with all their
might."

------

Nursing care tax's survival at stake
Commission examines proposal to scrap it in bid to lower labor costs
Frankfurter Allgemeine Zeitung Weekly, March 7 2003
By Michael Gavin

The "fifth pillar" of Germany's social welfare system may be cracking, as
the government continues to look for ways to reduce the social taxes that
many economists claim are stifling job creation.

Health and Social Affairs Minister Ulla Schmidt insisted that nursing
insurance, a relatively new addition to the list of social taxes that also
includes unemployment, health and pension insurance, would be maintained.
But the chairman of the commission assigned by the government to recommend
reforms to the social system pointedly declined to comment after
Handelsblatt newspaper reported last week that the commission was
considering a proposal to scrap or radically restructure the program.
The commission chairman, the politically well-connected academic Bert Rürup,
reports directly to Chancellor Gerhard Schröder's office, not to the health
minister.
Under the proposal, only the poor would receive state-financed nursing care.
Everyone else would be required to buy private insurance.

The nursing insurance tax is levied on paychecks in Germany at a rate of 1.7
percent of gross income. It has come under increasing scrutiny as the
government, frustrated by both stiff opposition from powerful lobbyists and
a weak economy in its efforts to reduce pension and health premiums, tries
to get social charges down to 40 percent of gross pay from 42 percent today.

The nursing insurance program was introduced eight years ago by the
Christian Democratic Union-led government of then Chancellor Helmut Kohl to
provide reliable nursing care - both at home and within institutions - for
the sick and the elderly. The Kohl government lauded the measure as the
fifth pillar of the social system - along with health, accident, pension and
unemployment insurance - and one that would be increasingly important
because of the country's aging population.

Its defenders believe the latter factor is part of the nursing insurance
program's political problem. They say that because most of the intended
beneficiaries are not likely to need help for at least another decade, it
makes an easy target for politicians desperate to cut spending now.
Doctors, in particular, warned that insufficient home care would mean more
and longer hospitalizations, and no net saving. "Already we have a problem
with people who are too healthy for the hospital but too sick to go home,"
said Frank Montgomery, chairman of the hospital physicians organization
Marburger Bund.

In a commentary written for Berlin's Tagesspiegel newspaper, Norbert Blüm,
who served as Kohl's labor minister and oversaw the introduction of the
nursing insurance tax, said that scrapping it would merely shift the cost
burden on to the public treasury directly, and bureaucratize a program that
now operates with considerable autonomy from the government. "Going back to
a publicly organized and financed system" will not solve the cost problem,
Blüm wrote.

The program covers more than 70 million people - the rest of the population
being privately insured - and provided care for more than 1.9 million people
in 2000, at a cost of more than EUR16.5 billion ($18 billion) annually,
according to government figures.

But those figures are expected to explode as the average age of the
population increases, probably making further increases in the nursing
insurance tax inevitable if it is maintained, critics say.