Germany - Six years of anti-working class policies under an SPD government

From Lutte de Classe #83 - Sept-Oct 2004 (published in Class Struggle #58 - Britain)
September 2004

Over the past months, a series of large demonstrations and strikes have taken place in Germany. In July, 80,000 Daimler-Chrysler workers staged a warning strike. There were stoppages held by Volkswagen workers throughout the summer. In October, 10,000 Opel workers occupied the Bochum production site for 6 days despite the opposition of union leaders. At the same time, every Monday since the end of July, tens of thousands of workers have been taking part in marches in Germany's main towns, against the government's plans aimed at the long-term unemployed - the so-called "Hartz IV" bill, named after its author, Peter Hartz, who is one of Shröder's advisors and also human resources director at Volkswagen - which says it all!! So far, these demonstrations of anger - but also of potential strength - have failed to stop, or even slow down the attacks aimed at the working class. This is partly due to the German trade-union leaders' determination to keep the lid on workers' militancy at all costs. But this also reflects the fact that the German working class has been under attack for many years already. In fact, these attacks began under the rule of Christian-Democrat chancellor Helmut Köhl, between 1982 and 1998. However, since Gerhard Schröder was re-elected for his second term, in 2002, the scale of these attacks has increased considerably. In most respects, the agenda of the German bosses and government is a reminder of the attacks already faced by the British working class, first under the Tories and, in some ways even more so; under Blair's Labour government since 1997. This is no coincidence, of course. Across the industrialised countries, the capitalist class has been on the offensive against the working population since back in the mid-1970s. The rhythm and speed of this offensive may have been different in different countries. But ultimately, its general direction is identical. In fact, the capitalists show a remarkable lack of imagination in the methods they use to turn the screw on the working class! [Class Struggle]

A barrage of attacks from the government

By the end of his first term, Schröder was rather discredited. If he was nevertheless re-elected, it was probably due to the fact that in the course of the election campaign, during the run-up to the invasion of Iraq, he made a clear stand against German involvement behind the USA. No sooner was he re-elected, however, than he embarked on a series of "reforms" - in fact, attacks against the working class.

In March 2003, Schröder presented his programme - the so-called "Agenda 2010" - to Parliament. Under the pretext that welfare funds were drying up, it included unprecedented cuts targeting workers in general, the unemployed, the sick and the aged. These cuts went from freezing pension payments for 2004 to extending the bosses' rights to sack workers in smaller companies. There were so many of them that it would take far too much space to list all of them here.

The "reform" of the health insurance system, which came into force in January 2004, speaks for itself. Under the pretext that the system's budget registered a slight deficit in 2003 (£2bn out of a total £100bn!), patients have been made to pay more. All medicines bought without a prescription, which used to be reimbursed, have now to be paid for in full. Doctor's consultations, which used to be entirely free, now cost £3.50 to £7.00 per visit, on top of the quarterly subscription fee which is now required for access to the health system. Hospital patients must pay a new daily £7.00 flat fee during their first 28 days in hospital. Many other services which used to be part of the state health system are no longer provided, except by private insurance schemes.

The newspapers are full of examples of disabled people's homes and post-operative centres which are facing drastic financial difficulties because their patients cannot to pay for services which are no longer covered by the state insurance scheme. Starting from January 2005, dentures will have to be covered by a special additional insurance (private or public) and, in 2008, additional insurance will also be required for the provision of sick pay! Of course, each added insurance means that workers have that much more to fork out!

The "reform" of the unemployment system involves a cut in the duration of unemployment benefit (reduced from 36 months to 12 months from February 2006) and a tightening up of entitlement conditions. From January 2005, the systems catering for the poor, on the one hand, and the long-term unemployed, on the other, are to be merged. Long-term unemployment benefit, which used to be around £105 per week, will go down to £53-£55/w. In the past, additional income support helped to bring the income of the long-term unemployed more or less up to the same level as that of other claimants. But this will no longer be the case, as all savings will be taken into account in the calculation of what income support they get. The bill's original draft even included claimants' children's savings above an amount of £520, as part of the calculation when assessing benefit entitlement. But this caused such a scandal that the government had to increase this children's savings threshold to £2830.

In addition, a whole series of preposterous "criteria" designed to test the "wealth" of the unemployed have been introduced, not unlike the British 1930s "means test", only updated.

Thus, for instance, the ownership of a car will be taken into account. If the car's market value is more than £3450, the claimant will have to sell it or face a cut in her or his benefit! Never mind the fact that the loss of a car can make finding a job more difficult! However the aim of all these measures is not to help the unemployed find jobs, but to force them into taking the first one on offer, no matter how low-paid.

The government still has many more similar projects on the drawing board - such as, for instance, cutting (yet again) the number of bank holidays by one, replacing the state health insurance system by a new "citizen's insurance" by 2006 (thereby opening the doors completely to private health insurance schemes), or postponing retirement age from 65 to 67.

The bosses on the offensive

Predictably, the government's policy has encouraged German bosses to embark on an offensive against workers. For a number of years already, companies have been leaving the employers' federation in order to avoid having to conform to industry-wide wages and conditions agreements passed by the federation and trade-unions. Instead, they have forced their own company-specific agreements on their workforces. As a result, the DIW (German Institute for Economic Research) estimates that, in 2002, only 70% of West German and 55% of East German workers were covered by industry-wide agreements.

In June 2003 the union IG-Metall launched a campaign demanding that the 310,000 East German metal and engineering workers should have the same legal working hours as in West Germany (35h/w in West Germany since 1995, as opposed to 38h/w in East Germany). Unlike to what normally happens in such circumstances, the bosses refused negotiate. However, since IG Metall's campaign was anything but a general fight, involving instead, just rolling stoppages and strikes limited to isolated companies, within 4 weeks it ran of steam, without the slightest gain.

But the bosses then decided to use this discrepancy in hours between East and West German workers against the workers themselves and destroy the shorter working week across the board. So they claimed that German workers earned too much for too little work and that they would therefore increase working hours without any increase in pay. At the end of 2003, the tyre manufacturing giant Continental and the medical apparel manufacturer B. Braun took the lead in this new offensive. In 2004, this spread to many small and large companies. Even huge companies which were immensely wealthy, such as Siemens, Daimler-Benz (the largest German company in terms of turnover), Opel, many banks, the airway company Lufthansa, etc.., resorted to the same trick, while blackmailing their workforce at the same time by threatening to offshore jobs to other countries, particularly to Eastern Europe.

In fact, the threat of off shoring, which is used systematically today, is mostly a bluff. In a survey carried out in 2003 by the Federation of Trade and Industry Boards, 18% of companies in the production sector said that they had already off shored some of their production in the course of the 3 previous years. However, this was less than in 1993, when the proportion was 24%! The practice of off shoring is nothing new, therefore, nor is it increasing. What is new, as in many other countries, is the use of the off shoring threat as an instrument of blackmail. As to the bosses' real aim, it is quite simply to get workers to work a few more hours for free, thereby cutting labour costs and boosting profits.

But already, the bosses are getting ready for new attacks. Thus, Michael Rogowski, the head of BDI (the German Industrial Federation), is demanding that annual paid leave should be cut from six to five weeks in the metal and engineering industries. In September, in an interview with the weekly, Die Zeit, he even had the nerve to demand that companies should no longer have to pay contributions towards the unemployment and health insurance systems!

The heyday of the capitalist class

The German capitalist class was defeated by its rival capitalists in two world wars that it had initiated in order to force a re-partition of the world in its favour. After 1945, it had to give up any idea of playing a major political role on the world scene and to concentrate on rebuilding its economic power and its profits. In that, it was very successful.

The country's reconstruction market was huge, particularly due to the destruction of a large part of its infrastructure. This market, combined with US aid (as part of the Marshall plan), helped to kick- start the German economy. But the capitalists had not forgotten that at the end of World War I, they had come very close to losing power to the working class. And that they had been threatened in this manner again several times during the 1920s. After 1945, they still feared the working class, even if this working class had come out of the war completely exhausted, having suffered 12 years under the Nazi's yoke and many months during which the Allied forces bombed the working class residential areas of the main towns into the ground. So the capitalist class made the choice of buying social peace with the carrot first, and the stick later. This policy was made possible by the period of economic expansion which lasted from the 1950s to the 1970s, allowing a steady increase in the standard of living of the working class. At the same time welfare provisions were improved in many areas.

However, the capitalists also took the precaution of repressing all forces which could have mounted any form of challenge to their power. So the Communist Party was banned between 1956 and 1968 and a system of blacklisting was introduced in the civil service against all those who were suspected of opposing the Federal Law (the equivalent of a Constitution).

Binding wage agreements were introduced, whereby a union which signed such an agreement had an "obligation to maintain social peace" for its duration. In return, union machineries were offered a role in managing the interests of the bosses through a system of "co-management". As early as 1946, several large companies offered the unions non-executive positions on their boards of directors. A law adopted in 1951 (under a right-wing government) began to extend this system, which was finally generalised by an SPD-led government, in 1976.

The anti-working class dictatorship imposed on the population of East Germany under the cover of "communism" was an effective enough deterrent, helping convince West German workers that they should go along with the "social market economy" promoted by the champions of capitalism.

These conditions were very conducive towards the development of German capital without it having to deal with major social problems. For instance, the student agitation of the 1960s failed to find a militant echo in the working class, unlike what happened, to various degrees, in other countries, particularly in France and Italy. For decades, Germany has had the least number of working days "lost" through strikes out of almost all western countries: a total of 11 days for 1000 waged workers over the period 1990-2001, compared to 51 in the US and 327 in Spain (figures from Münich IFO Institut).

After the fall of the Berlin Wall, German capital rushed eastward. Its aim was not to invest productively nor to develop the East German economy. Instead, East German companies were torn apart and sold at bargain prices to West German capitalists, who only bought those industries and facilities (sometimes it was even just a workshop) which they considered profitable enough. The rest of the East German economy was just closed down in order to do away with any potential competition. At the same time, the East German market was opened up to the large West German supermarket chains, which received generous subsidies while flooding this new market with their goods.

All this generated huge profits. But this period of fat profits only lasted for a few years. From the economic recession of 1992-1993, onwards, some voices in the ruling class began to question the so-called "Rhenan model" - i.e. the state social welfare system, in particular. Indeed, the fall of the Berlin Wall had boosted the arrogance of the German capitalist class. It no longer saw any political reason to maintain a welfare system which was in some ways more favourable to the working class than any existing system in neighbouring countries.

Germany's decline - a fraud

The current attacks against the working class are being justified to those under attack, by the need to preserve "Germany's productive capability" which, it is claimed, would be threatened by "excessive production costs" - meaning "excessive" wages. But the government and Länder's authorities use quite another tone in the literature they publish to attract foreign investors. One brochure, for instance, states that "in Germany, wages may be high, but productivity is also high and absenteeism is low, while corporation tax has been cut considerably over the past years." This brochure concludes by boasting that "in terms of overall costs to investors, Germany is on a par with the European Union average." Besides, of course, wages have been stagnating over the past decade, keeping only very slightly ahead of official inflation.

The German economy may not be in a period of fast expansion compared to the 1960s and the government's budget deficit may have been above the 3% maximum required by the European stability pact for the past two years, but to talk about an industrial downturn, or crisis of productivity in Germany, is pure nonsense. Indeed, over the past 25 years, the real value of industrial production has increased by an average 2% a year. And a survey published by the German daily Die Welt last summer showed that out of the country's 100 largest companies, 67 had made profits in 2003 and only 17 had made losses (figures for the remaining 16 were not available).

As to Germany's trade balance, it shows a surplus, just as in the heyday of the 1960s. In fact, in 2003, Germany overtook the US and Japan as the world's largest exporter. While this may be partly due to the rise of the euro against the dollar, it is certainly does not show any evidence of weakness on the part of the German economy!

Besides, German capital has resumed its role in its natural Eastern European "hinterland". So, for instance, German car manufacturers are responsible for the 63% of the cars produced in the 10 countries which joined the EU in May 2004. But this is also true of China, where German manufacturers account for one-third of car production.

Workers' conditions going down the drain

For many years unemployment has been high, reaching 4.3m in August 2004, or 10.5% of the active population. Like in most countries, this figure understates the problem. According to estimates quoted by the employer-friendly DIW Institut, an additional 2.5m people come under the so-called "social management of unemployment" system (i.e. various forms of training, state subsidised short-term contracts, etc..), meaning that the real rate of unemployment would be around 16%. East Germany is most severely affected by joblessness. However even in West Germany, where the average official unemployment rate is "only" 8.4%, in working class towns such as Dortmund, in the Ruhr area, this rate reaches 15.4%!

Despite the deterioration of their conditions, the workforces in the largest companies still enjoy relatively high incomes. But very low pay also prevails, especially in small/medium companies. Last June, a program shown by the state TV channel ZDF showed how the firms which had the contract for cleaning job centres in Nuremberg paid their women employees £2.75/h (which is far below the legal rate in the cleaning industry).

There is also an increasing number of casual, part-time jobs. Most of them pay £64/week, with employers only having to pay social contributions at half the normal rate. By the autumn of 2003, 5.9m workers were in such "micro-jobs". For some, this was an additional job in order to make ends meet. But others had no form of employment other than these "micro-jobs". And already it has been announced that, in 2005, local councils and various community associations would be allowed to create jobs paying the equivalent of 70p/hr(!) for the long-term unemployed, who will have no option but to take them for fear of losing part of their benefit.

In East Germany, the situation is near-catastrophic. Whereas the old German Democratic Republic used to face a shortage of manpower due to the fact that its population was steadily decreasing, unemployment has rocketed since German reunification. Companies were either closed down or "rationalised". Within a few years, 2.5m jobs had disappeared. Today, the rate of unemployment reaches 18.3% across East Germany. In the Leipzig area, industrial employment has dropped from 500,000 in 1889 to 12,000 today and some workers have been unemployed for over ten years. Those to whom Helmut Kohl promised a "blossoming future" at the time of reunification, feel deeply humiliated today.

Legally, wages are lower in East Germany than they are in West Germany - even though the cost of living is identical. It is fashionable among politicians to explain - as the German president Horst Köhler did, once again, in September - that enormous funds (more than £830bn over 15 years) have been spent, in vain, in subsidies to the new Eastern Länder. However these funds went primarily to companies: they were used to subsidise so-called "new jobs", to pay redundancy money to workers whose jobs were being cut, but also to build motorways, revamp the telephone network, etc.. In any case, East Germany has lost over 1 million inhabitants over the past 15 years and half-a-million make a long trek in to work from East to West Germany, every day.

As a result of all this, poverty has been rising constantly, after having virtually disappeared during economic expansion. In 2000, 9.2% of the population was living below the poverty line. This figure reached 12% last year. And this situation will inevitably get worse once all the measures contained in "Agenda 2010" are implemented.

The trade-unions' spinelessness

German bosses could not have enforced such a turn of the screw without the active help of the various governments of the past 15 years. But nor could they have done it without the failure of the trade-unions to organise any sort of counter-offensive against these attacks. Under the cover of "saving" the wage agreement system, or jobs, the unions agreed to one concession after another.

Yet, the German unions have the reputation of being powerful. The DGB, the German trade-union federation which is linked to the SPD, still has 7.7m members. For years, it prided itself in having made "gains" while being "responsible" and avoiding endangering the economy with frequent strikes. However, while part of this strength expressed the old traditions of the German working class movement, the DGB owed much of its power to the fact that German bosses considered it in their interests to sustain the credit enjoyed by their trade-union partners in the "co-management" system.

Today, at a time when the capitalist class wants to claw back the concessions it made in the past, the DGB turns out to be incapable of organising a fight back which corresponds to the bosses' attacks. In reality, the DGB's leaders want no such fight back - not only because they are too close to the SPD government, but also because they are intrinsically far better at defending the interests of the profit-based economy that those of the working class. Thus, these leaders took part in the Hartz commission, which prepared the present attacks against the unemployed, without disagreeing with the principles behind the commission's conclusions, but only with the harshest measures they included against the jobless.

The working class is facing, therefore, a drastic degradation of its conditions and standard of living. For the time being, it has taken one blow after another and a large section in its ranks is confused and demoralised. All the more so, because workers feel they have everybody against them - the bosses, the SPD-Green government, the right-wing parliamentary opposition (which supported every one of Schröder's anti-working class measures and even used its majority in the Bundesrat, the German Senate, to make these measures worse) as well as the trade-union leaders.

The population's discontent expressed itself in the ballot box. In the September 2004 regional election, there was a sharp drop in the turn out, the SPD made significant losses while the far-right made some gains. But obviously this is not going to change the orientation of the SPD's policy. In fact, it is not a coincidence if it is the SPD which is taking responsibility for destroying today a whole series of gains from the previous period. The capitalist class expect the SPD to use its influence to get the working class to swallow these attacks silently. The SPD leaders are conscious of these expectations and they are prepared to pay the price for this, even if SPD becomes deeply discredited among the working class. The SPD has a long tradition and history of servility towards the capitalist order and the SPD leaders do not intend to put it into question.

As to the Party for Democratic Socialism (PDS), the direct successor of the East German Stalinist party, its "influence" can be to some extent be measured by its score - below the 5% mark - in the 2002 general election. However, its score has increased in every election since, particularly in East Germany where it retains a significant network of activists, but also in West Germany, despite much weaker organisation. This probably reflects a feeling among East German workers that reunification failed to bring them the promised happiness. But at the same time, it is sadly ironical that the only way these workers have to express their discontent should be to turn to a party which exercised political power for 40 years in the name of the working class, but in fact primarily against it.

After its long Stalinist period, the PDS mutated into a social-democratic party whose main difference with Schröder's SPD is the fact that the PDS is not involved in the federal government. But where the PDS has acquired enough weight to take positions of responsibility, it behaves exactly like the SPD. Such is the case in two Eastern Länder - including Berlin - where the PDS has joined the SPD to run the regional administration and implements the same austerity policy with all due loyalty.

For the working class, the future is elsewhere. To defend itself and win the right to live and work decently, German workers will have no choice but to resort to collective struggle. We can only hope that the "Monday marches", which have been going on since the end of July to protest against the attacks aimed at the unemployed, will be part of the build-up to such a struggle - as well as the huge Berlin demonstration (on 1st November 2003), which brought together 100,000 people without the support of the trade union machineries, and a series of local strikes and demonstrations over the past year. However, although they provide some hope, these initiatives still involve only a minority.

Indeed, despite its huge weight, the DGB does nothing to build up a powerful movement of protest. Yet powerful movements of protest, and moreover strike, would be the only means of bringing the government and the capitalist class to the point where they think that they may have something to lose and, therefore, that it might be wiser for them to back-peddle. For such movements to emerge, it will be necessary for workers to rediscover real strikes - not like today's standard stoppages, which are planned weeks in advance to take place between two bargaining sessions and have become part of the institutionalised game between the bosses and the trade unions. It will also be necessary for workers to rediscover the habit of holding meetings, where issues are fully discussed and decisions made, and the habit of participating actively in the common struggle and controlling it democratically. The traditions of the working class movement can help in doing this. But it will also be necessary for working class activists to realise that the previous period of "co-management" is over. That it was always a lure, like bait for a trap. And although it could bring about some improvements long ago, today it can only result in the unions endorsing defeats.