Globalisation and Class Struggle in Germany (page 3 of 5)
By Jerry Harris

The corporate offensive next spread to DaimlerChrysler with similar demands on hours and wages and threats to move production to South Africa. This time the union mobilized 60,000 members in protest only to eventually concede once again. Transnational capitalists celebrated the victory, as Keith Hayes, an analyst at Goldman Sachs, said; ‘This is definitely the start of a trend. There’s a new spirit of accommodation … This is a really good step forward.’21 Smelling blood in the water, VW continue the onslaught demanding flexible work rules and a two-year wage freeze. Even this most German of transnationals could not ignore taking advantage of the more competitive labor accords.

Transnational capitalists have focused on German workers because at 1,446 hours per year they work less than employees anywhere except the Netherlands. 22 Klaus Zimmermann, president of the German Institute for Economic Research complained that ‘We have created a leisure society, while Americans have created a work society…our model does not work anymore.’23 But only about nine million German workers labour between 36-39 hours per week, with ten million actually putting in 40 hours or more. According to the ISO research institute, full-time employees already average 42 hours a week in western Germany and 43 hours in the east. Moreover days lost to strikes are extremely low, during the 1990s Germany averaged only 4.8 compared to 42.5 in the US.24

Driving up work hours is only one goal the TCC has for Germany, the other is driving down the overall social costs of labour. As Elga Bartsch, Executive Director of Morgan Stanley argues ‘excessive labour costs are one, if not the main, reason for Germany’s weak economic performance…getting a grip on labour costs is essential in order to regain price competitiveness…if anything the labour market reforms implemented by the government have been too late (and too little). But certainly not too soon.’25 Notice the problem is not labour productivity, which even the IMF admits is about on par with the US, but as they argue, ‘The real lag is in terms of the use of labour.’26 The problem therefore is twofold, to get employed Germans to work longer hours and force unemployed Germans back into the workforce for less pay.

The TCC has turned to the Social Democrats to deconstruct the social accords the party was instrumental in building. The main leadership of the Social Democratic Party (SPD) has linked their future to transforming the German state and its welfare and social security net. Schroder, along with Tony Blair, was an originator of the Third Way; a neo-Keynesian version of globalisation that was fashioned to soften class conflicts and create the human capital necessary for transnational production. But the SPD’s Agenda 2010 has included cuts in the health care system, pension benefits and unemployment coverage, while providing tax cuts for corporations and rules that make it easier to hire and fire workers. The cuts are not as deep as those advocated by the Christian Democrat Union (CDU), but it is clearly an agenda driven by globalist’s concerns.

Among the most controversial changes are those in unemployment benefits designed to force people back into the workforce below normal wage levels. These deep cuts in benefits are known as the Hartz IV laws, named after Peter Hartz, a VW executive appointed by the government to overhaul Germany’s labour laws. Part of Hartz IV was to create a category of low-paid part-time employment called ‘mini-jobs.’ Companies are relieved of social security payments and other taxes associated with hiring new workers, while gaining access to a pool of temporary labour that has already grown to 7.6 million people. Another result of driving the unemployed into low-wage labour is greater competition between Germans and immigrants. Germany has 7.3 million immigrant workers, the largest immigrant workforce in Europe, most filling unskilled jobs.

The Hartz IV cuts in unemployment benefits caused a political explosion, particularly in east Germany where the 18.5 percent unemployment rate is double levels in the west. During the summer of 2004 Monday demonstrations become a regular feature in Leipzig, growing to 90,000 by the fourth week. The demonstrations spread to other cities including Stuttgart, Cologne, Dresden, Magdeburg and Berlin, at one point reaching half a million protestors. Critics of the reforms point out that thousands of jobs in eastern Germany have been destroyed since reunification and that cuts in benefits can’t drive people to work when there aren’t any jobs. As Andreas Ehrholdt, leader of the Mageburg protestors said, ‘We do not need charity, we need work.’27

Although SPD leaders eventually were willing to make some minor concessions their loyalty to globalisation remained unshaken. Commenting on union opposition, SPD chairman Franz Muntefering stated, ‘The welfare state in Germany was born as an answer to national capitalism, which no longer exists. The trade unions are still fighting a national battle.’28 The drive to reshape the working class to fit the new global relations of production is a central task for transnational capitalists. Only through the transformation of the social structure of accumulation can the TCC realign the Germany economy. To achieve these goals the SPD can count on support from capitalists spokespersons like Ludolf von Wartenberg, director of the German industrial federation, who stated, ‘Everyone must stand behind the decision (to cut benefits) and support the implementation of the reforms.’29 The EU political leadership in Brussels also urged Germany to push older workers and mothers to work, gear education for corporate requirements, ease protections against dismissals and decentralized wage negotiations.

While global capitalists go about cutting wages, benefits and security they worry about the lack of domestic demand and consumption. Locked into their neo-liberal dogma and lead by the logic of globalized competition they see the problem as the solution. As one commenter observed, ‘structural reforms are needed to make German labor competitive and help turn globalisation from a threat to an opportunity.’30 Yet it is exactly these structural reforms and competitive efficiencies that are driving down German living standards and buying power. Complaining about the lack-luster German economic recovery because of depressed consumption the Financial Times argues the ‘only choice is to press on with product and labour market reform in the hope that this will stimulate demand. In this regard Germany once again is one of the best exhibits of the eurozone’s chronic weakness: inflexible labour supply and early retirement … inefficiencies like this must go.’31 But getting older workers to labour for reduced wages is hardly a solution that will propel the German economy upward. As Marx pointed out long ago driving down the cost of labour has always been the Achilles heel of capitalism, resulting in overproduction, underconsumption and economic crisis.

In a globalised economy this tendency has even more serious implications. With depressed consumer spending in Japan, Germany and Europe the US market has been the main engine of the weak world economic recovery since 2002. But spending in the US is supported by huge financial bond investments by China and Japan that prop up the value of the dollar and creates a huge accounts deficit. With the global economy depending on balanced consumption to strengthen all major world markets this puts everyone at risk. Yet the continuing drive by the TCC for efficiency and low labour costs undercuts consumer markets not only in the overly exploited third world, but in the developed world also. As national economies get bound more closely to circuits of global accumulation recession and growth become interlinked worldwide cycles. What threatens one tends to threaten all. With Germany producing one-third of Europe’s GDP, stagnating demand not only affects their national economy but the weak world recovery.

All but forgotten are the post W.W.II Keynesian investment booms that created jobs at decent wages resulting in the US consumer society and the German economic miracle. But capitalism has outgrown such models of national development and now draws its logic elsewhere. As Wolfgang Munchau points out, wages and welfare ‘cannot explain the unexpected, sharp and persistent decline in economic growth since 2001. This decline has been almost entirely due to a fall in private-sector investment…12.1 per cent over three years. For a mature industrial economy this is an extraordinary decline.’32 Yet transnational capitalists continue to blame high wages and welfare for stagnation even as they worry about weakening consumer markets.

The internal logic of transnational capitalism remains in force because of global competition. Afterall why invest in Germany when low wage countries like Poland, China and Mexico are hungry for jobs? Their only answer is to destroy the economic model linked to the previous social structure of national accumulation. These changes are underlined by the expansion of the EU to Eastern Europe with their attractive low wage and tax structures. Even Austria has moved to cut their corporate tax rates and labour protection laws attracting high-profile defections from Germany. While workers continue to protest offshoring, Germany’s six top economic institutes warned against political moves that would deprive businesses of tax advantages and ‘reduce the productivity gains afforded by specialisation within the international division of labour.’33 The global organization of labour results in greater productivity at lower wages abroad resulting in world overproduction with greater unemployment and underconsumption at home, this in turn propels the demand for cheaper labor and longer hours to create a competitive labour market in Germany and somehow all this is suppose to lead to a renewal of a vigorous consumer market.

Instead the resulting political instability is evident in the class conflict over unemployment benefits and also in the political crisis within the SPD. Much of the SPD’s history is based in the working class and institutional support received from the trade unions. With frontal assaults on working class security this base is rapidly leaving the Party. Since Schroder took office in 1998 the SPD has lost close to 20 percent of it members and suffered defeat in a number of important regional elections. In the June 2004 elections to the European parliament they scored their lowest total in a federal election since 1945 with only 21.5 percent of the vote. An even greater indication of crisis is out of 439 electoral districts the SPD is the leading party in only 12, less than the Party of Democratic Socialism (PDS), the reconstructed East German Communist Party. Facing electoral defeats and the lost of 130,000 members Schroder resigned as chairman of the party, but this hardly satisfied the internal opposition.

Klaus Ernst, head of the IG Metal trade union stated, ‘The SPD has not just betrayed its electoral promises, it has betrayed its founding principles.’34 Michael Sommer, head of the DGB trade union federation added he would ‘never make peace with the kind of social reforms’ pushed by Schroder’s government.35 Opposition to SPD’s neo-liberal agenda culminated with the trade unions and left wing of the party creating the Electoral Alternative Labour and Social Justice association. It remains to be seen just how serious the trade union leaders are about splitting with their old friends and setting up an electoral rival. The unions themselves have suffered a decline in membership over the last decade and their defeat in a number of major contract battles indicate their own weakness.

With both major parties committed to neo-liberal globalism, the working class has turned to both the left and right in search for an effective opposition. In recent regional elections the PDS emerged as the second largest party in Brandenburg with 28.3 percent of the vote and also came in second in Saxony. In a poll taken on political attitudes 76 percent of east Germans remain convinced that socialism was ‘in principle a good idea.’36 Far right parties also grew, the National Democratic Party of Germany winning 9.4 percent in Saxony and the People’s Union managing five percent in Brandenburg. Meanwhile both the SPD and CDU saw huge losses, the CDU losing 16 percent of its support in Brandenburg and the SPD scoring below 10 percent in Saxony, a historic low. Such electoral swings reflect the struggle over neo-liberalism and the fact that both major parties are dominated by globalist sectors of the capitalist class.

More >>