September 05, 2007
Powerful German Union Elects Moderate
Germany's powerful IG Metall engineering trade union appears set for greater compromise with industrial and political leaders after the decision by its leadership on Monday to back a moderniser as its next chairman.
The union's executive board proposed Berthold Huber, deputy chairman, as the next leader. Chairman Jürgen Peters, a left-wing hardliner who has clashed with business and government on economic reforms, is to step down at a union congress in November.
There are different schools of thought on whether or not we see a convergence or divergence of Industrial Relations Systems. I am in the camp that believes we are seeing a convergence and the election of a moderate to head Germany's most powerful union is another sign in that direction.
The response of Western European trade unions to 'globalization' has been interesting. Many US activists used to point to European Unions because they were seen as so much stronger than U.S. unions and were able to maintain pay and benefit levels while U.S. unions were making large concessions.
In reality the European Unions were not more militant or stronger, rather they did not face the same pressures as U.S. unions and were operating under a very different IR system. That has begun to change and if anything when faced with the same pressures European Unions seem less willing to engage in the type of industrial battles seen in the U.K. and U.S. during the 1980's.
***Side note, the UK model of Industrial Relations and UK economic policy are more similar to the U.S. than continental Europe - for Industrial Relation purposes this is referred to as the Anglo-Saxon model
September 22, 2005
Vietnamese Unions Adapt to Globalization
Are labor unions in "third-world" countries winners or losers in the latest incarnation of the global economy?
Unions Face Changes With Vietnam's Imminent WTO Membership (Thanh Nien News - free)
The Next Proletariat
I've run across an interesting article on the site - Tech Central Station. The author argues that the same forces behind the decline of labor unions is also undermining the European economic model.
The Next Proletariat? (free)
September 15, 2005
More Signs of Convergence in Germany
There are more signs that Germany's Economic system is transforming and becoming more like their liberal counterparts in the US and UK.
Germans Feel Health Squeeze (WSJ Subscription Required)
BERLIN -- Since 2001, the Malteser Social Service has offered free medical care to asylum-seekers, travelers and refugees. Now, the walk-in clinic has a new group of patients: ordinary Germans.
Squeezed by the country's new get-tough welfare changes and its stagnant economy, at least 300,000 Germans went without medical insurance last year, according to estimates by insurance groups and experts. That is up from 188,000 in 2003, according to a government survey. While the figure pales beside the roughly 45 million uninsured in the U.S., it is worrying to a country that has prided itself on universal coverage.
The trend is one of the reasons for the unsettled mood in Germany ahead of this Sunday's general elections. The vote was called by Chancellor Gerhard Schroeder, in part because he lost support of the left wing of his Social Democratic Party for pushing through overhauls. That helped create the first new major political party in Germany in a generation, the Left Party, which polls show as the third-largest party heading into the vote. It could play the role of spoiler, denying the usual left-of-center or right-of-center coalitions a majority.
"The state has pulled back more and more from care of the population," says Thorsten Rudnik, spokesman for the Association of the Insured. "Many people are calling the system into question."
(click link for rest of article)
German Election This Sunday
This Sunday's election in Germany will have serious implications for the future of European Industrial Relations systems. Here are a few articles worth reviewing:
German Voters Voice Anger & Doubt (International Herald Tribune - Free)
Merkel Gets Personal (International Herald Tribune - Free)
In German Vote One-Time Outsider Offers Big Changes (WSJ Subscription Required)
German Elections Down to the Wire (WSJ Subscription Required)
Is The European Model Broken?
Martin Wolf, columnist for the Financial Times, asks this question in yesterday's column:
Europeans Can Look To Each Other (Financial Times - Subscription Required)
Is the “European model” broken? To many outsiders the answer is a strong yes. Increasing numbers of insiders are beginning to agree. They fear that a supposedly savage Anglo-Saxon liberalism will overwhelm the civilised European economy. Happily, this dichotomy is grossly oversimplified.
There is also an interesting paper on the topic available free at Bruegel.org:
September 09, 2005
Germany's Industrial Relations System Under Pressure
From reader Robert D
For seven years Germany has been governed by a center-left coalition. This government was elected in 1998 because a majority of the electorate was tired of conservatives promising that fiscal austerity, lower unemployment benefits and social security, and restrained wage growth would bring prosperity and full employment. However, the new government’s program has made that of its predecessor look like neoliberalism with a human face. The new government, led by the Social Democratic Party of Germany (SPD), has launched the most severe attacks on labor and social standards since the establishment of a welfare state after the Second World War. Since, for most of its history, the SPD has presented itself as the main force pushing for expansion of the welfare state, its anti-worker actions have deeply disappointed its followers and surprised its opponents.
September 08, 2005
Korean Unions "Change to Win"
Two major Korean unions are taking steps to become one union.
From The Chosun Ilbo (free)
|Two Major Labor Unions To Become One Feb. 2006
Korea's two major labor unions are looking into ways to integrate and
kick off an era of so-called "one country, one union" by February next
year to strengthen their voice and to prevent division among workers.
In order to successfully form an integrated-union, the Federation of Korean Trade Unions and the Korean Confederation of Trade Unions first plan to establish a negotiating body this month, which will carry out a joint campaign for laborers. Representatives of the unions say not all members agree with the integration at the moment.
Analysts note that once the two unions merge and become larger, they would demand significant changes in the labor-management relationship.
August 01, 2005
More Problems for Western Europe Manufacturing
Today's Wall Street Journal reports on the troubles that lie ahead for Western Europe's manufacturing workers.
Western Europe's Labor Woes (Subscription Required)
Western Europe's Labor Woes (Subscription Required)
FRANKFURT -- A number of multinational companies are cutting jobs more heavily in Western Europe than in other regions, highlighting how sluggish growth and structural problems in many European countries are driving away investment.
Among the recent examples, International Business Machines Corp. said in late July that of its 14,500 planned layoffs, 70% would fall on Europe, mainly in Germany, France and Italy -- the three economies that dominate the euro currency area. Household-appliance maker Electrolux AB of Sweden is evaluating 27 factories for possible closure, as part of a strategy to shift the focus of its production from high-wage Western Europe to cheaper countries, especially in Eastern Europe and Mexico. Car maker General Motors Corp. is currently shedding 12,000 employees in Europe, including nearly a third of its 32,000-strong German work force -- a proportionately deeper cut than its parallel cost-cutting measures in the U.S.
July 14, 2005
Germany to Be the Vanguard of Moving the EU Closer to the US Economic Model? Political and Business Climate Shifting
It's looking like Germany will take the lead in moving the EU and continenntal Europe towards greater liberalization of its markets, particularly the labor market.
Today's Wall Street Journal features an article on East German born Angela Merkel and her free market philosophy. Ms Merkel is considered a serious contender to be the next leader of Germany. From the article Free Market Voice in Germany, (subscription required):
Polls show Ms. Merkel's Christian Democrats leading Mr. Schröder's party by more than 15 percentage points before an election brought on by Mr. Schröder's decision to call for a vote of no confidence in himself after losing an important local election. Although the election date, expected in September, has yet to be scheduled, her party announced its platform this week, and Ms. Merkel is now filling in the details of how differently she would lead Germany from Mr. Schröder.
In the interview, Ms. Merkel eschewed explicit talk about whether a Merkel-led government would change Europe's power balance, but she said an alignment in favor of more-flexible labor markets "could mean that Europe works better again." She continued: "We in Europe are unfortunately at a point where a great many decisions aren't being reached, and a standstill is the worst thing for Europe. For me it's not about the balance of power, but about an effective Europe that can reach the goals it has set itself."
On the business end the VW scandal that has been blogged about here (for past blogs on the VW scandal click the Volkswagen category on the left hand sidebar) is merely the setting for a re-examination of Germany's co-determination policy which does not mesh well in a world currently converging towards greater market liberalization. Today's business press features more articles and analysis on the VW Scandal.
The NY Times: From a Scandal Springs a Chance for an Overhaul at Volkswagen (registration required)
"If we cannot survive here at Volkswagen," he said, summing up his remarks, "then industrial Europe is going to die."
While Mr. Hartz has not been accused of any wrongdoing, he symbolized the convoluted web of ties between Volkswagen's management, union leaders, employee representatives and government officials, which critics say is rife with opportunities for graft and abuse.
The exit of Mr. Hartz and the ascendance of Mr. Bernhard, analysts say, could augur a new era at Volkswagen - one in which the management has more leverage over workers and unions, and shareholders have more say in the operation of the company, Europe's largest carmaker.
"It's a real chance," said Jürgen Pieper, an auto analyst at Metzler Bank in Frankfurt. "The biggest problem for investors has always been the enormous power of the unions. Slowly, steadily, Volkswagen may become more market-oriented, more profit-oriented."
John Gapper offers the following in German System that No Longer Works from today's Financial Times (subscription required):
You might have thought that he could live without suggestions that VW bribed members of its 67-strong works council by paying for their foreign holidays and prostitutes. But it has led to the departure of Peter Hartz, VW’s director of personnel, and given Mr Pischetsrieder a chance to crack into the company’s ossified structure of labour relations.
Looking at VW’s supervisory board, with its 50 per cent labour and union representation and seats for politicians from the state of Lower Saxony, which has an 18 per cent stake, it is not surprising that VW has problems taking tough decisions. The board is so replete with insiders and so painfully democratic it seems a wonder any cars get made at all.
As Britain’s automotive industry foundered on the rocks of strikes and low productivity in the 1970s and 1980s, we envied Germany’s way of persuading workers to co-operate. An industrial democracy movement sprung up and unions negotiated with the government and businesses in the awfully named – and awful – tripartite era. It did little good.
So it is strange to witness – as the remains of Rover are sold once again – VW’s travails. Co-determination helped VW to succeed for decades but something that used to have a living, breathing purpose has turned into a relic. In place of worker participation, there is union bureaucracy. In place of shop-floor involvement, there is expense-account shopping.
This suggests that even modest reforms of co-determination to allow more flexibility – as German employers want – would help. The shenanigans at VW are an extreme case but any company that allows itself to become co-opted by insiders runs the same risk. Twenty years ago, as Britain flirted with tripartism, Germany wrote the parity of workers and shareholders into federal law. It is time to think again.