Union representative Klaus Zwickel described the fight for a shorter workweek as “a question of social justice.”
The employers association president, Martin Kannegiesser, condemned the threatened stoppage, arguing, “Recovery in the east should not be endangered by IG Metall.”
“Recovery,” however, is not the most accurate word for the situation facing German capitalism. The strongest European imperialist power remains mired in an economic crisis. The official unemployment rate, which understates the real situation, stands at 4 million, or 11 percent of the workforce. The jobless rate is twice as high in Saxony and other eastern provinces. After growing by a negligible 0.2 percent last year, economic output has shrunk by the same amount in the first quarter of 2003, making for six straight months of contraction.
This and other data “point to continued stagnation,” reported the country’s central bank, the Bundesbank, in a May 21 statement. Bank officials said they planned to revise downward their predictions of 0.5 percent growth in 2003. The virtually nonexistent growth and intensified price competition has raised the threat of long-term deflation—a widespread tendency for prices to fall.
In a little more than a decade German imperialism has gone from a prolonged period of economic growth and a dominant position in Europe, including over its French rival, to its present status as the “sick man of Europe.”
The big-business media pins the blame for this rapid decline on the wage levels and social rights won by working people. A typical news report in the online edition of CNBC TV stated that Germany’s “notoriously generous social welfare system” is not only “crumbling”—it is “strangling Germany itself.” Such pundits urge the coalition government of the Social Democratic and Green parties, headed by Chancellor Gerhard Schröder of the Social Democrats (SPD), to take a bigger knife to social spending. Schröder will present his latest package for ratification by a special SPD conference on June 1. First announced in March, the measures would slash benefits to the long-term unemployed, and strengthen the bosses’ hand in firing workers.
An article in the Wilson Quarterly, a bourgeois American journal, repeated such laments, speaking of the country’s “costly welfare state,” and complaining, “labor costs are high, and labor unions are so strong that it’s difficult to fire workers.” It also detailed the enormous costs to the German rulers of their attempts to integrate the economy of the east, following the country’s formal reunification in 1989.
Costs of reunification
The social wage of workers in Germany, east and west, is the product of decades of struggle. In eastern Germany, capitalist rule was overthrown after World War II and bourgeois social relations have not been restored there, even since the country’s unification in 1990. Instead of being strengthened by unification, the German capitalists have been forced to devote substantial resources, especially unemployment benefits and other social payments, to working people in the former German Democratic Republic.
The predictions at the time of unification by former British prime minister Margaret Thatcher and others that “a united Germany would be uncomfortably powerful for its European neighbors” have been turned on their head, wrote Martin Walker in the Wilson Quarterly. The enormous financial drain on the coffers of the capitalists has not let up. The $1 trillion in state subsidies to the east is “10 times more money, allowing for inflation, than the Marshall Plan pumped into West Germany after 1949,” wrote Walker—a reference to loans, grants, and investments that Washington used to shore up the shaky capitalist order in western Europe following World War II.
The reunification subsidies include massive tax breaks and handouts to German capitalists to construct factories in the east to take advantage of its “one structural asset, cheap skilled labor.”
The article noted other facts indicating the extent of the crisis and its disproportionate impact in the east:
As this crisis unfolds, the German economy retains an enormous weight within Europe. It remains 50 percent larger than that of its strongest European rivals, Paris and London.
Germany’s economic weakness “could drag the rest of the eurozone into recession,” commented the May 22 Financial Times. The statistics office of the European Union has reported that factory output in the 12 countries using the euro currency plunged by 1.2 percent in March. In 2001, more than 55 percent of German exports went to nations in the European Union.
The resistance put up by the numerically strong steel and autoworkers and other industrial unions to such attempts to strengthen the bosses’ hand is not the only obstacle in the path of German profit recovery. Of particular concern to the German capitalists is the sluggish growth in their export markets.
“Without doubt the export business has become more difficult,” noted the Bundesbank report.
The U.S. dollar has already fallen almost 30 percent against the euro since its peak in 2000. The decline of the dollar has put new obstacles in the path of German and other European exporters. Their products have become less competitive as their prices in dollars, the dominant currency of international trade, has risen.
The U.S. government has refused to take action to shore up its currency. “The dollar’s value is best set in an open, competitive currency market with minimal intervention,” stated the U.S. Treasury.
Conflicts between Washington and its major rivals in Europe have burst to the surface in the buildup to the Anglo-American invasion of Iraq and in its aftermath.
The May 22 issue of the British daily Guardian reported that given the “current atmosphere,” officials at Eurocopter, a giant Franco-German manufacturer of helicopters, have decided not to compete for a lucrative contract to upgrade the U.S. presidential helicopter fleet. A senior executive said, “There’s no way this contract is not going to go to an American group and it’s unthinkable a European company…would stand even a ghost of a chance.”
Washington’s disputes with its European rivals over each power’s protectionist measures in agricultural trade have even wider implications. In a speech to U.S. Coast Guard graduates, U.S. president Bush attacked the EU’s near-total ban on the import of genetically modified foodstuffs. Pretending to be concerned about the agricultural crisis in many African countries, Bush called for the increased use of “high-yield biocrops” on the continent.
“Yet our partners in Europe are impeding this effort,” he said, in a reference to Paris and Berlin. “They have blocked all new bio-crops because of unfounded, unscientific fears. European governments should join, not hinder, the great cause of ending hunger in Africa,” Bush intoned. He made no mention, of course, of Washington’s attempts to open the lucrative European market.
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