As the largest economy and the most
populous Member State, Germany has always been seen as the ‘motor’ of
the European Union. Since its unification in 1990, however, the motor
has been idling at best. Now that there are signs of a resurgence we
examine the prospects for the unions, the country and the EU as a whole.
BY MOST MEASURES GERMANY HAS the third largest economy in the world, it
is the world’s top exporter with particular strengths in motor
vehicles, machinery and chemicals. With over 82 million people, more
seats in the European Parliament than any other Member State and the
leadership of the two leading political groups, its influence in the EU
should match its manufacturing might. However, for much of the Union’s
history Germany did not punch its weight; for historical reasons
alliance with France was thought essential for the progress of the
Community. Paradoxically the joining together of East and West Germany
in 1990, signalling the end of the Second World War hangover and the
formation of a stronger political unit, also ushered in a decline in
economic strength. Unemployment rose to over ten per cent and remained
stubbornly above that level. The Social Democratic government of the
late nineties, under Gerhard Schröder, concentrated on cutting
social benefits and removing restrictions on employers to try to get
the economy moving. While trade unions protested at measures such as
‘Agenda 2010’ they were often ready to make agreements which restricted
wage rises and even increased hours on the basis that jobs would
otherwise be lost to countries to the east where labour was cheaper.
Whether due to these reforms, or as a result of other factors, the
economic statistics have shown a remarkable turnaround over the last
few months. A fall of 86,000 in the unemployment figures for October
took the total below the 4 million mark, at 9.6% of the workforce,
whereas GDP growth is expected to reach between 2.5 and 3% for 2006
putting Germany ahead of the leading industrial nations. However
much weaker statistics for retail spending would seem to support the
trade unions in their contention that most workers have not yet shared
in this bounty. Union leaders have signalled
the end
of a policy of wage restraint and intend to conduct more aggressive
bargaining to secure rises. Frank Bsirske, head of the Ver.di services
union, has noticed ‘a shift in the political conversation’, with
concepts such as social justice and fair wages regaining currency. He
intends to redirect the coalition government of Chancellor Angela
Merkel from decreases in corporate tax and raising VAT to a legal
minimum wage which does not exist in Germany. A rate of €7.50 per hour
would lift 2.4 million workers out of poverty, he says. Metalworkers’
union IG Metall is hoping to conclude a profit-sharing deal which
should net its 2.7 million members an increase of about 5% this year.
Detlef Wetzel, chief negotiator in North Rhine-Westphalia blieves that
‘If they are not going to give, we are going to have to take’. However,
with the industry predicted to make a €29.8 billion after-tax profit
for 2006, even the head of the employers’ association ‘Gesamtmetall’
agrees that ‘our employees should receive an appropriate share of the
growth and success’. Unions reject the argument that such rises will
fuel inflation in the EU as a whole: ‘It's too simple to say nowadays
that what IG Metall does goes for the rest of Germany and Europe’ said
Ronald Janssen, of the ETUC.
It remains to be seen if the economic resurgence will give Germany
enough clout to sort out the problems of the EU in its presidency
rôle
which it took over at the start of the year. Chancellor Merkel wants to
negotiate with the US on trade with the prospect of an eventual
Atlantic free trade zone as well as revive the constitution and improve
relations with Russia.
