Germany's workplace revolution

2nd July 2004, Comments 0 comments

Germany was once a worker's paradise with among the highest wages and best conditions in the world. But as Andrew McCathie reports fast-paced globalisation, high unemployment and a shaky recovery are leading to erosion in job benefits built up during the prosperous post-war years.

Is this the end of the 35-hour week?

Twenty years after Germany's powerful metalworkers secured an historic 35 hour-week, a shaky economic recovery plus growing competition from low-wage countries in Central Europe and Asia have resulted in employers moving to reintroduce a 40-hour week.

With German industrial workers enjoying among the highest wages in the world and some of the best employee benefits, more than 100 companies across a range of industries have lodged demands with their unions for a sharp extension of the working week, in some cases without any additional pay, and in exchange for agreeing not to make any layoffs.

Germany's state-owned railways, Deutsche Bahn AG, has become one of the latest companies to unveil plans to increase the working week from its present level of 38.5 hours to 40 hours including provisions for employees to receive the same wage. In return, the company would not make further job cuts.

At the same time, leading German machine and equipment maker, MAN AG, has also launched negotiations with its workers' union to increase the working week from 35 to 38 hours. Otherwise, it will begin making layoffs.

Other German employers have been lining up to cut back the working week such as car spare parts supplier Bosch, tyre maker Continental and tourist group Thomas Cook with the nation's recession-hit building industry calling on workers to accept a wage cut and the introduction of a 42–hour working week.  

But the push to extend the working week is part of the revolution in the German workplace that was emerged following the changes unleashed by the breaching of the Berlin Wall in 1989 and fast-paced globalisation which have result in an erosion of workers' rights won during the more prosperous days of the nation's post-war Wirtschaftswunder (economic miracle). 

*quote1*"It is a process which started during the 1993 recession and which has gained momentum in the last two years," said Adolf Rosenstock, European economist with Nomura International.

Indeed, with unemployment having escalated in recent years and economic growth having stagnated, the days when German workers could look forward to a Christmas bonus (the so-called 13th monthly pay), paid overtime, holiday loadings and in some cases, spa treatments have been rapidly disappearing along with work contracts guarding against redundancy.    
In the meantime, Chancellor Gerhard Schroeder's Social Democrat-led Government is considering reducing the number of public holidays in the country so as to shore up economic growth.

Forty years ago Germans worked on average a 44.56 hour-week, but growing economic prosperity and the success of IG Metall, Germany and the world's biggest industrial union, in gaining a 35-hour week as a result of a tough seven-week strike in 1984, has meant that the average working in the nation has fallen to 37.77 hours.

But labour market economists say evidence shows the average working week for many Germans employees has already increased ahead of the employers' campaign for a 40-hour week with a large part of the workforce working more required under their contracts.

Now, however, in the wake of the opening of new markets in low-wage high-skilled parts of Central Europe, German employers are threatening to shift more operations out of Germany unless their workers accept longer working hours.

With unemployment in Germany stuck at more than 10 per cent the battle over moving jobs out of the nation has rapidly taken on political dimensions with German Chancellor Gerhard Schroeder saying that German companies shifting production abroad are "unpatriotic".

However, German electronics giant, Siemens AG, has already forced workers in parts of its German operations to agree to extend their working week from 35 hours to 40 hours so as to secure their jobs in Germany.

At present employing 170,000 workers in Germany, Siemens has been threatening to move part of its operations to nations such as Hungary, which along with eight other Central European states became members of the European Union on 1 May.

Siemens said labour costs in Hungary are about 30 per cent lower than in Germany and has launched talks with workers' representatives in a bid to slice back wages in its domestic German market.

But Siemens rejects union claims that the group is planning to slash its German workforce by about 74,000 in the coming 10 years with company chief Heinrich von Pierer insisting that the Bavarian- based firm wants to keep jobs in Germany but that intense global competition means certain parts of the business need to lower costs.

Indeed, Germany's southern state of Bavaria appears to be spearheading the push to return to the 40-hour week with conservative Premier Edmund Stoiber seeking to extend the working hours of the state's public servants.

Last month Siemens announced that it will invest USD 1.2 billion in China over the next few years as part of a plan to double revenue in the country, with part of the funds going towards beefing up its research and manufacturing facilities in the nation.

Fast-paced globalisation and employers threats to shift operations to neighbouring EU nations have further served to undermine the influence of Germany once powerful trade unions, which have also been hit by a recent dramatic slump in membership as unemployment has climbed and worker interest in the union movement has declined.

However, some analysts are doubtful about the economic benefits of rolling back the shorter working week with Martin Werding, a labour economist with the Munich-based Ifo economic institute saying that reducing labour costs was the crucial factor in checking the shift of business operations out of Germany.

July 2004

[Copyright Expatica 2004]

Subject:  German news, work, jobs extending the working week

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