Germany: Labor Problems


I discussed the crisis at General Mootors' Opel plant in Bochum, Germany.  Randy Black comments: General Motors in Germany suffered from labor union unrest, coupled with the stagnated German economy, for years. During 2004, German labor unions staged wildcat strikes across Germany and other European plants supported those walkouts to protest potential job cuts due to losses generated by slow sales and low profit margins.
 
The GM facility in Poland, however, opened in 1998, and supports one of the strongest auto sales markets in Europe. When the plant began recruiting in 1997, 34,000 people submitted applications for the initial 1,200 jobs, which have since grown to several thousand. The carmaker also indicated it would be shifting some production from the two German plants to a newer plant in Poland. The arithmetic is simple: an autoworker in Germany costs $38.10 an hour; the same worker in Poland costs $7.20. German workers evidently feel that their actions, while jeopardizing their jobs, are justified. Time will tell.

Where there were only a couple of dozen GM dealerships in 1998 in Poland, today there are more than 100.

All of this marked a watershed in Germany's post-war economic history. German industrial workers, generally regarded as the highest-paid in the world, have come face-to-face with the new realities of globalization and the eastward expansion of the European Union. And the companies they work for, long intimidated by Germany's powerful labor unions, suddenly realize they have some leverage.  Siemens, the country's fourth-largest private employer, now has more workers outside Germany than inside. The company recently persuaded its German workers to go from a 35-hour workweek to 40 hours by threatening to move their jobs to Hungary. Similarly, DaimlerChrysler and Volkswagen won major concessions on wages and hours in return for promising to keep jobs in Germany.
 
The need for Germany's industrial workers to become more competitive has been clear for at least 20 years, say economists and business leaders, but successive German governments chose avoidance rather than confronting the problem head-on. A classic example of this approach was the government's politically popular--but ultimately useless--insistence on a seven-year moratorium on the free movement of labor from the EU's new eastern European members. If Poles were barred from looking for jobs in Germany, companies like GM simply moved the jobs to Poland.  A decade ago, 73.4 percent of the cars carrying a German nameplate were made in Germany; last year, the number slipped to 55.5 percent.

German bigotry exposed: Still, autoworkers in Germany cling to the stereotype that Poles and other eastern Europeans are incapable of producing high-quality cars, that Poles can't afford to buy cars and that Germans would never buy cars produced in Poland or the Czech Republic. The fact that wealthy EU countries, like Germany, subsidize poor countries, like Poland, also fuels their resentment.
 
Sources: http://www.autointell.net/nao_companies/general_motors/opel/opel-eis2.htm
 http://www.iht.com/articles/2004/10/19/business/gm.html
 http://www.chicagotribune.com/news/nationworld/chi-0501020005jan02,1,2122371.story?ctrack=1&cset=true

Referring to Christopher Jones' piece about German labor problems, I asked "What is meant by "loan dumping"?  He answers: My apologies for the typo: it should read lohn and not loan.  Translation: wage dumping.  I am in no way trying to demean Polish workers, they simply live in a different structure but by the same token, Germans cannot be criticized because they live in one of the richest countries on earth. RH: It wasn't a typo; it was a mistranslation.  Christopher was thinking half in English and half in German, in which "lohn" means wages. He had given the impression that he was demeaning Polish workers; he denies this.

Christopher Jones writes:A major demonstration took place in Brussels against loan dumping throughout the EU that highlights the crazy ideas at work in the EU and globalization in general.  They want to defeat the so called Bolkestein plan (equated with Frankenstein by the demonstrators) that would allow for any worker from any member state to work in any other country under his home conditions -- that is to say that a low wage earning Polish worker may be employed in high wage Germany for example, under Polish labor conditions (minimum wage in Zlotys, no contributions to the German social benefit scheme but rather the Polish one (nonexistant) etc.  Try living in Germany on Polish wages.

Regarding the GM Opel plant, I don't think the move will improve their prospects in the long run.  There are too many players in the European car market and Opel and maybe even VW are increasingly seen as very weak players.  At any rate, the workers at these plants will receive a huge settlement package so there is little need to shed tears over Rüsselsheim. In the end, I believe that much of this move in production will have no choice but to return to Germany. If the labor market becomes more flexible and the tax situation improves under a new CDU/CSU government, (in particular, I am rooting for Friedrich Merz's Bierdeckel flat tax to replace income tax) the benefits of the reliable German worker in a country with the best infrastructure in Europe will shine through again.  (The German worker shows up to work, come what may) In fact, there are quite a few cases of companies that moved out [high on the list are th Czech republic and Slovakia] and returned after a few years -- even in the current mess.  Low costs are one thing, but if you have to build roads for your plant as well, or the country is constantly paralyzed by strikes that mean you cannot get your goods out, the benefits of Germany's infrastructure are obvious.

Finally, I find the whole love affair with low wage eastern Europe perverse.  Poland is an agricultural country with enormous unemployment.  All these low wages haven't been able to cut the country's massive un and under employment for years now.  In fact, turbo-capitalist global players are far more interested in super low wage Bulgaria and Romania.  Who is next?

RH: Ed Jajko praised the Poles as hard workers, Christopher praises the Germans. How can one make an objective comparison?  What us meant by "loan dumping"?

The GM facility in Poland opened in 1998, and it supports one of the strongest auto sales markets in Europe. When the plant began recruiting in 1997, 34,000 people submitted applications for the initial 1,200 jobs, which have since grown to several thousand. The carmaker also indicated it would be shifting some production from the two German plants to a newer plant in Poland. The arithmetic is simple: an autoworker in Germany costs $38.10 an hour; the same worker in Poland costs $7.20.

Ed Jajko, of Polish ethnicity, comments:Looking at this from a different perspective, I can't help but feel that there is a certain symmetry in the shift of GM manufacturing from Germany to Poland.  In 1980-1981, the cities of Detroit and Hamtramck, Michigan, allowed the General Motors Corporation to destroy Poletown, an old Polish-American neighborhood of Detroit, so that GM could build a new Cadillac assembly plant.  Some 4,200 citizens were removed from their homes by power of eminent domain, the neighborhood was levelled, and a way of life was destroyed.  (In 2004, the Michigan Supreme Court acknowledged that its judgment of more than twenty years before in favor of GM and the cities was wrong; gee, too bad, folks).  If Poles can now profit from GM, even at a fifth of German wages, great.  They are skilled, diligent, hard workers.  The only thing that bothers me about this is that GM profits also.

Ed Jajko





Ronald Hilton 2005

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last updated: April 12, 2005