Germany: A Pyrrhic Labor Victory

German Interior Minister Otto Schily
Throngs of press photographers greet German Interior Minister Otto Schily as he emerges from talks seeking to resolve a public sector pay dispute in Potsdam, Germany, Jan. 9, 2003 (Photo: Patrick Pleul/AFP).

To avert a strike by 2.8 million public employees, the German government agreed on Jan. 9 to give them a 4.4 percent wage increase phased in over the next 27 months. But for a country grappling with an unemployment rate of 10.1 percent, this costly settlement could not have come at a worse time. “No matter how you look at it,” wrote Bernd Oswald in Süddeutsche Zeitung (Jan. 10), “this deal is too expensive for a country that is broke.” According to Stephan Lorz, writing in Börsen-Zeitung (Jan. 11), “The settlement will add 2.5 billion euros (US$2.6 billion) to federal spending this year, and the states will likely raise taxes or resort to substantial job and program cuts to make ends meet.” In response to the settlement, some states want to leave the trade employers’ union, which led the negotiations with the workers’ union, Verdi.

Berlin has taken this step and is not part of the costly settlement; other states want to follow Berlin’s example in future labor disputes, to enable them to work out individual settlements according to their fiscal condition. “Will [the states] do it?” asked Eva Roth in Frankfurter Rundschau (Jan. 17). “Going it alone could trigger many local labor disputes—and many strikes.” Muriel Büsser, writing in Rheinischer Merkur (Jan. 16), was not too concerned: “Consensus, compromise, peace of mind: For the next two years, the states will not bother us by following through with their threat.”

Sam Hapgood (Frankfurter Allgemeine Zeitung, Jan. 10) put the blame for the costly deal on Chancellor Gerhard Schröder and observed wryly: “[He] keeps smiling and trying to convince us that everything is going to be all right.” Peter Hort went further and added in the same paper (Jan. 10): “If something doesn’t happen soon, Europe’s ‘sick man’ will miss the [E.U.] stability goal this year again.” Die Tageszeitung (Jan. 7) opined that the government’s lack of funds to shoulder wage hikes results from errors in recent tax reforms, leaving loopholes and allowing big businesses to avoid paying taxes. “The private sector has landed us in this mess, but civil servants, workers, and all those hit by budget cuts will be expected to dig us out. That is not fair.” Andreas Thewalt asserted (Hamburger Abendblatt, Jan. 11): “[This] is nothing more than a hollow compromise that will hurt the public.”

But some commentators voiced their contentment over the deal. As part of the settlement, workers had to relinquish one vacation day a year. “Employees will have to work longer for a pay raise,” wrote Christoph B. Schiltz (Berliner Morgenpost, Jan. 11). “This will set a precedent for future labor talks, when employees will have to match a pay hike with more work.”