German unions feel the squeeze

18th November 2003, Comments 0 comments

Faced with a declining membership, big cuts in their budgets and after being outgunned by Chancellor Gerhard Schroeder in the battle over his economic reforms, Germany’s once powerful unions are in the grip of a crisis. Andrew McCathie asks what is the future for Germany’s labour movement?

IG Metall's income dropped by EUR 6.7 million last year

Having led the charge against Chancellor Gerhard Schroeder'e economic reform agenda, Germany's big unions are now being forced to face up to the same grim reality that has engulfed the nation's corporate and government sectors.

Indeed, Germany's giant Verdi service sector union, which is also the world's biggest union, recently held its annual congress in Berlin against the backdrop of plans for a round of major cost cutting, including downsizing its board and laying off workers as membership numbers dwindle and a ballooning deficit hits its finances.

But despite a EUR60 million hole in its wages bill and the prospect of next year of having to slash its 5,000 strong workforce by 800, Verdi chief Frank Bsirske has insisted that the union's financial woes would not impact on its negotiating ability.

However, as a mark of the sense of financial urgency facing the union, Verdi members will in future be required to travel by train on second class tickets when on union business, with the Verdi board to be shrunk from 16 to 11 over the next four years. The union hopes to balance its books by 2007.


A similar bleak financial picture has also emerged at IG Metall, which is the world's biggest industrial union. This year alone IG Metall has lost more than 80,000 members and has also been forced to launch a major savings drive and cut jobs.

As a result of the sharp drop in membership, IG Metall's income dropped by EUR 6.7 million  last year.

Since it was forged in March 2001 by combining five unions from the public sector, retailing, banking and media industries, Verdi has lost 200,000 members.

The dramatic slump in membership follows three years of economic stagnation in Germany which has resulted in a rising tide of unemployment. Modest wage increases have helped to fuel discontent about the unions especially when union dues represent 1 percent of gross income.

In the four years to the end of last year, membership of Germany's peak union council, the DGB, plunged by more than 400,000 with job losses continuing across the nation's industry this year as the national economy stumbled into a recession during the first half of the year.

*quote1*IG Metall’s decision to press for a relatively moderate wage hike of up to four percent in the nation’s next pay round was seeing by analysts as sign that the union might feel that it is time to step back from more aggressive pay demands.

In particular, this followed a disastrous IG Metall-led campaign for a shorter working week in the hard-pressed eastern past of Germany and a bruising battle over the union’s top post.   

The financial drama currently playing out in the unions also comes as Schroeder's Social Democrat-led government battles to drive its health, welfare and labour market reform agenda though parliament.

While the lower house of the German parliament, the Bundestag, last week signed off on the Chancellor's so-called Agenda 2010, the government still has to negotiate large slabs of the reform package through the opposition-controlled upper house, the Bundesrat.

Although leading members of German industry have fallen in behind Schroeder's plans, the Chancellor no doubt believes it would be helpful if he had the support of the Social Democrats' allies in the union movement.

But with the reform plans including moves to wind back the country's welfare state and to introduce more flexibility in the jobs market, the unions have been among the leading opponents of the changes with Bsirske taking a particular hard line against the measures, claiming they would leave the "better off, better off and the worst off, worst off."

As a result, relations between Bsirske and the Chancellor are understood to have fallen to a particularly low ebb with the Verdi chief this week calling for the creation of a coalition to oppose economic reform.

November 2003

Subject: German news

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