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| The Marx and Engels Monument, Berlin 2011 |
The Britisch magazine
The Economist of half June had a Special Germany Report*. Very
interesting stuff to read even if you take in account that The
Economist is one of the leading promotors of neo-liberal thinking. If
you as a trade unionist want to know, what your opponents think it is
therefore perhaps especially wise to read the Economist. One of the
interesting parts of The Special Report is the one called “the
working parts”. It is about those characteristics that explain why
Germany is not doing so bad during this European crisis. Another
reason to read The Special Report.
One very interesting
question especially for trade unionists, is why Germany has such a
favourable employment record? “A decade ago Germany
had one of the worst jobless rates in the rich world. Today its
employment rate of 5,4% (using OECD figures) is one of the lowest in
Europe. Youh unemployment, below 8%, is half that in America and a
third of the European average. It is also the lowest Germany has een
for 20 years.”
According to The
Economist's Special Report this is not the result of booming growth.
“Over the last decade Germany's economy has on
average grown more slowly than American's and Britain's and barely
faster than that of the euro zone as a whole. But Germany managed to
avoid a surge of lay-offs after the financial crisis and has done far
better than others at getting the young and the hard-to-employ into
work.”
The Economist wonders
how Germany did manage that? “Most explanations heap praise on
the Mittelstand model and the system of vocational training. Firms
take on apprentices, mixing practical training with classroom
tuition. The German Government also points out that the country “did
its homework”, introducing tough labour reforms from 2003 (known as
'Agenda 2010') that freed up the labour market. And the system of
Mitbestimmung (which gives trade unions seats on company boards)
encouraged wage restraint.”
But for the Economist
this explanation is not sufficient: “a cheap currency,
some dumb luck ( this sounds irrational especially for the
neo-liberal Economist) and a fair amount of fiscal pragmatism also
played a part.(....)
Shocked by high joblessness and the hollowing out of German industry,
the Social Democratic Government under Gerard Schröder introduced a
set of sweeping tax, regulatory and labour reforms in 2003. The most
important part of this package were the so-called Hartz reforms (
after Peter Hartz, who headed the commission that drew them up),
which brought fundamental changes to the low end of the German job
market. They eliminated payroll taxes on earnings of less than €
400 a month (recently raised to € 450 ), thus encouraging the
creation of part-time 'mini-jobs'. “
The Economist finds
that these 'mini-jobs' brought back into work the long-term jobless
and gave employers an incentive to create low-skilled and temporary
jobs and the jobless a reason to take them. “The also made
Germany more Anglo-Saxon. Some 20% of Germans now work in “low-wage”
jobs, about the same share as in Britain, not much lower than in
America and almost twice as much as in France. Germany's employment
boom had less to do with the Mittelstand than with this overhaul at
the bottom, which pulled a lot of low-skilled people into work –
though it also exerted a downward pull on overall productivity.”
The reforms had also
what the Economist calls “big knock-on effects.”: “In
conjunction with a move east by many German firms, they persuaded
Germany's unions to accept years of tight wage restraint. Between
2001 and 2010 German wages rose by an average of just 1,1% a year in
nominal terms, leaving them flat in real terms. Unit labour costs
fell sharply relative to those in other countries.”
* The Economist, The
Reluctant Hegemony, Special Report Germany, June 15th – 21st 2013,
page 12.
