Thursday, August 15, 2013


Below you find a reaction on the earlier published blog on German Mini Blogs (July 12 2013), written by Adalbert Ewen, President of the German Metal Union CGM affliated to the German Christian Confederation CGB. The CGM is affliated to the World Organization of Wokers WOW.

At the beginning of the new millennium, Germany was considered "the sick nation of Europe". How could it therefore be possible to reverse this situation and to grant Germany a role model– whether rightly or wrongly?

In the years from 2001 onwards, the Schröder government underlined the importance of national and international labor market reforms, particularly the so-called "Hartz reforms" of the years 2003 to 2005. The federal government applied the so-called flexicurity, that is, demanding a stronger activation of jobseekers, by fully deregulating the legal basis of individual forms of atypical employment opportunities. Thus, the creation of minor employment was considered the alternative to unemployment, especially in the expanding service sector. Nevertheless, during high times of the new economy, one resisted the temptation to expand this sector further, especially in the financial sector. Instead, all Länder-governments wanted to maintain and further strengthen the industrial 'Germany', including special support for the middle class with a total of 1,400 companies, belonging to the world market leaders. Here, the relationship between trade unions and employers has played a major role. The social partners established security of employment as a major element, which has been crucial for the German success and for our competitiveness.

Therefore, the importance of labor market reforms is often oversubscribed. Very flexible labor agreements with the trade unions contributed to strengthen the equity base of the companies and to increase profitability. Therefore, even at the peak of the financial crisis in 2009, closure of a larger number of companies could be avoided, among others due to short-time working.

Nevertheless, there is a correlation between high growth rate and income inequality. In Germany, thanks to reforms, unemployment has been reduced from five to three million. The appropriate wage policy secured many well-paying jobs in the industry. Therefore, Germany has a higher share of industrial employment than France or England, for example. Moreover, Germany presents a high trade surplus, because a large part of industrial productions goes into the world market.

The beginning of the millennium showed a real wage loss, but from 2005 onwards, trade unions increasingly managed to reverse this trend. The only problem left over, in fact, was the greatly increased number (more than 7 million) of atypical employments (mini-jobs, part-time and temporary work). As much as these jobs contributed to more flexibility on one hand, on the other, they also led to significant revenue losses for the social security institutions, and they will lead to increasing poverty among the elderly, especially women, whose average pension is already significantly below that of men.

So-called "mini-jobber" are not insured against unemployment and not affiliated to the statutory pension insurance of self employed. The latter has recently been made possible – though quite inadequately. Mini-jobs put increasingly tariff rates (rates established in collective agreements) under pressure, because since ten years, the former limitation to a maximum allowable working time has been dropped (crowding out effect of regular employment).

  • Unemployed people bear the greatest risk of poverty. About 56 percent of them are at risk of living in poverty (poor people perceive less than 60 percent of average earnings in Germany).
  • Nearly 59 percent of the poverty threatened is able to escape poverty by means of a low-wage job.
  • According to my union, this mini-jobber need better legal requirements, most notably the elimination or significant reduction of the minimum threshold of compulsory social security.
While maintaining a minimum threshold, the (re)introduction of a limit for allowable working time in hours (previously 15 hours per week) is essential, in order to allow an hourly wage corresponding to a minimum wage of 8.50 € for a monthly salary up to 450 € - as requested by the unions.

Adalbert Ewen

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