Germany

["Ian Murray" <seamus2001@xxxxxxxxx>]

[the Guardian]
Strikes damage Schröder's election hopes
Industrial disruption in Germany may help usher in a government with
neo-Thatcherite plans, reports David Gow
Monday May 13, 2002

Is Germany, the sick economy of Europe, really heading for the rocks this
time? Today sees the start of the second week of the strikes by
engineering union IG Metall - the first such stoppage for seven years.

Klaus Zwickel, its chairman, is calling out 145,000 workers in 135
companies after last week's downing of tools by 100,000 in 88 firms in
the south-west region of Baden-Württemberg.

Symbolically, for the first time since the Weimar Republic in the 1920s,
strikes will take place in Berlin, the capital, and the surrounding
region of Brandenburg. We all know what happened after the republic named
after the home town of Goethe and Schiller collapsed, ushering in what
some Germans still euphemistically call the Period 1933-1945.

Well, there's no chance of history repeating itself on that scale just as
the 18% poll of Jean-Marie Le Pen in France scarcely bodes the
dissolution of the fifth republic in a wave of barbarism and fascism. But
the strikes testify to there being something rotten in the state of
Germany just 12 years after the country's euphoric reunification.

Superficially, the strikes are entirely justified. In the past seven
years net living standards for the 3.6m employees affected have scarcely
risen - enabling a redistribution of wealth upwards. The boardrooms of
leading German companies, meanwhile, have seen an outbreak of Anglo-Saxon
fat cattery, with the shift towards shareholder value accompanied by
hefty pay rises and bonuses for directors.

What's more, the relative moderation of German pay settlements has helped
the economy continue to grow albeit at a very low level. But this year IG
Metall has had enough, demanding initially 6.5% and, when pay talks broke
down over the offer of 3.3% and a one-off 190 euros increase, "a four
before the comma" or a bit more than 4%.

Zwickel insists that not only is such a rise justified by the
profitability of the sector and increased productivity but also by the
need to boost the purchasing power of employees and, with it, consumer
confidence as a whole.

By ratcheting up expectations, the union leadership has ensured that the
strikes could last for some considerable time despite tentative efforts
last week at restoring negotiations. IG Metall has sought to confine the
economic impact of the stoppages by calling out strikers on a rolling
basis - "flexi-strikes" mirroring the new so-called flexibility of the
labour market.

But, economically, they could not come at a worse time. Germany last year
crowned a decade as the country with the lowest growth in the EU with
just a 0.7% rise in GDP; this year's pre-strike forecast is for, at most,
1%.

There are still 4m unemployed though this headline total masks a greater
number economically inactive or in the black economy. Even with a greater
degree of part-time working and short-term contracts, there are millions
of long-term unemployed effectively denied access to paid employment.

Commentators, including on the left, point to the unions' rigid
insistence on national pay agreements and rejection of lower entry-rates
as a prime reason for the persistent high levels of joblessness. These,
in turn, are damaging the country's growth prospects.

It's a common complaint that Germany's unreformed unions are,
effectively, redistributing work - and wealth - among those who already
have jobs and excluding those who don't. The strikes, moreover, will
hasten further unemployment in the engineering sector, a key motor of
Germany's export-led recovery, and decline in union membership, which has
already sunk in the past decade from 12m to below 8m.

Politically, the strikes are damaging to Gerhard Schröder's chances of
being re-elected on September 22 as chancellor. The SPD and its Green
coalition partners, supposedly supported by IG Metall, are likely to be
forced out of office by the Christian Democrats and Liberals - unless
Schröder can translate his far greater popularity over Edmund Stoiber,
the right's candidate, into votes for his party.

The chancellor, who has already seen his promise of 3.5m jobless by the
general election evaporate, is forlornly urging Zwickel and his
colleagues to return to the negotiating table. Both should know that the
strike could easily turn out to be the last twitch of the dinosaurs. A
right-led government under Stoiber is certain to re-engineer Germany's
labour relations in a neo-Thatcherite manner.

·David Gow is the Guardian's industrial editor.