Print this article
For the first time since 1992, Germany is facing an open-ended public-sector strike. The walkouts began on Monday in the southern state of Baden-Württemberg, where “10,000 public-sector employees stayed at home”, says Bertrand Benoit in the FT.
The strikes will spread across Germany next week as the service sector union, Verdi, pushes for shorter hours for its members. Baden-Württemberg’s 220,000 municipal employees currently work a 38.5 hour week, but the government would like to “ratchet it up to 40 hours without increased compensation”, says Marc Young in Der Spiegel.
This has “naturally raised the ire” of Verdi, which started the strikes as a warning. Cornelia Haass, a spokesman for the union, said that it was preparing for a drawn-out conflict that could reach across the country: both the city-state of Hamburg and the northern state of Lower Saxony have balloted Verdi members on extending the strike.
Across Germany, the union represents 2.4 million workers, and the 10,000 already on strike are intending to stay away for up to six weeks. This will be highly inconvenient to the rest of the population, says Süddeutsche Zeitung. It’s the “garbage men, kindergarten employees and hospital workers [who] don’t want to work 18 minutes more a day” who are striking – making life difficult for everyone else. “The union has little hope of sympathy.” Thanks to Germany’s anaemic growth – forecast to be just 1.5% GDP growth for 2006, according to the Hamburg-based HWWI – the strike could have deeply damaging consequences. Business confidence is currently at its highest level since May 2000, but “such strikes are never good for the economy”, Joerg Kraemer, chief economist at HVB Group in Munich told Bloomberg.
The workers are digging their own graves, says the Frankfurter Allgemeine Zeitung. It claims that the strike makes no sense, as municipal workers in the economically depressed eastern Germany are already required to work a 40-hour week – sometimes a 42-hour one. In the end, striking in the current economic climate – against a backdrop of empty public coffers – is only going to hurt the workers more. “Whoever strikes against longer working hours today is sawing on the branch they’re sitting on.”
Achim Dercks, the deputy managing director of the Berlin-based DIHK industry and trade association, agrees: the strike “sends out the wrong signal” at a time when the economic recovery needs all the help it can get. What’s more, the IG Metall union is taking advantage of Verdi’s moves by demanding a 5% pay raise for the country’s 3.4 million metal-industry employees. It says that it will go on strike if a deal has not been struck by early April.
However, a deal looks as though it will be hard to achieve – last year, wages for industrial workers increased by 1.2% – below inflation of 2%. And in the last ten years, real income in Germany has fallen by 0.9% (compared to an increase of 25% in the UK). With GDP growth still so low, and a budget deficit that is still breaking the EU’s budget-deficit limit of 3% of GDP for the fourth year running, these strikes could help the country shift towards privatisation. Hans-Günter Henneke, managing director of the DLT association of German local authorities, told the FT that “while we are not fans of privatisation, the strikes increase the danger that more and more local authorities will go in this direction”. Longer term, that could be good news for German growth.
Published in
Economics
| More
articles
by
Annunziata Rees-Mogg
Related articles
-
By Bill Bonner, Jun 29, 2011
-
By Bill Bonner, Jun 28, 2011
-
By Bill Bonner, Jun 27, 2011
-
By Bill Bonner, Jun 24, 2011
FREE - MoneyWeek's daily investment email
Our free daily email, Money Morning, is an informative and enjoyable analysis of what's going on in the markets. Written by our Editor, John Stepek, and guest contributors.
Sign up FREE to Money Morning here.