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Home Opinion The German left and the EU
Trade Unions • Austerity • Angela Merkel

The German left and the EU

John Monks - 26 April 2012

The powerful German trade unions body has hardened its stance against the Merkel austerity line. The European left must take serious note

The German trade unions are rightly regarded as perhaps the most powerful in the European Union, a power which they have chosen generally to exercise with restraint and moderation.  But are things changing? Is the patience of the unions running thin with this approach? And where does Europe fit in?

Interestingly, and despite close links, the DGB – the German TUC – has not endorsed the Social Democratic Party in the previous two General Elections. It has instead cultivated a practical working relationship with chancellor Merkel and, through that, it has been able to exert pressure against the right-wing elements of her coalition in important ways.

The DGB successes have included prompting the chancellor’s decision in 2008 to introduce a major short-time working scheme so that, as the worldwide crash hit German industry, there was government money to keep workers in employment and preserve the skills base. This kept skilled workforces together, and it has been a great contribution to Germany’s subsequent economic success. It was, in effect, a major subsidy to German manufacturing – a step the UK should have followed. Action to combat unemployment is permissible under the EU single market rules.

The DGB has also diverted right-wing attempts to toughen laws on unions and workers and to de-regulate employers.

It has been less successful in securing a national minimum wage. Some of the pay levels in the German service sector are astonishingly low for such an advanced country – some are below six euros an hour. That failure rankles, as does the growing realisation in the union ranks that it is only possible to be an export champion when foreigners are buying German goods, and when austerity remains the general European experience, then demand for German exports is bound to be affected, sooner or later. If domestic consumption is flat – one reason why the DGB wants a national minimum wage to boost the low paid – the outlook from Germany could become as difficult as it is for some other EU countries, including the UK.

It is, perhaps, easy to exaggerate this changing mood. Germany is not likely to embark on general strikes – as seen in Greece and Spain recently. Merkel still rides high in the polls.  But the German unions are hardening their stance and, given their importance as Europe’s largest economy, everyone should take notice.

Hitherto, in the European Trade Union Confederation, the DGB has been cautious about distancing itself from the Merkel line. But now a new union grouping, involving senior left figures in the DGB, including the president, alongside others from academia and individual unions, has established a campaign (Europa Neu Begründen – Justify New Europe) where they argue powerfully for a new approach in Germany and Europe, rejecting the austerity line which has characterised the EU, including the UK, since 2010.

They reject, too, that the crisis is caused by over-generous welfare states, excessive levels of pay and pensions (although they are highly critical of top executive level excess), and inflexible labour markets (ie markets where there is no easy hire and fire). They remind us of the origins of the crisis in dysfunctional financial markets and of the greed and irresponsibility that captured much of the banking system. Yet public expenditure and vital public services are being cut to meet the costs of the crisis while there are few signs of decisive action to prevent a repeat of it, and to force greater responsibility and restraint onto financial markets.

Most of all, they allege rightly that the imposed austerity of the German government on the distressed countries of the eurozone, especially Greece, threatens to endanger not just social democracy, but democracy itself.

Their alternative proposals include taxes on financial transactions and effective banking regulation; the eurozone must guarantee government bonds, and European monetary policy should reflect youth and employment policy goals, not just financial stability. The EU should develop a transfer union to help poorer regions and different countries. (There are some similarities here with the policies of François Hollande in his French presidential campaign.)

More specifically for Germany, the campaign aims for stronger pay increases to boost demand and to put an end to the continuing redistribution of income from labour to capital.

Finally, the campaign focuses on the future of Europe itself, and calls for steps now towards greater and closer union. Europe is today associated with state debts, austerity and cuts in welfare and workers’ rights. Even stricter rules on fiscal discipline are to be included in a new Treaty. This will diminish support for the EU from the population at large and, if not reversed soon, could spell the end of the EU project. The unexpected support for Marine Le Pen in the first round of French presidential voting confirmed that trend.

Coming from such prominent players on the left in Germany, these points should be taken seriously, and should also be the subject of fresh thinking in the British left which, for too long, has tried to abstain from the debates about the future of Europe. Our German colleagues in the unions and in the Social Democratic Party are applying themselves to these issues and are beginning to flex fresh muscle in the political debate.

We know that in this country we have much to learn from Germany in terms of manufacturing excellence, high levels of vocational training, quality public services, good corporate governance, strong collective bargaining and so on. But we have political lessons to learn too.  The Germans are realising that social democracy cannot work, any more than socialism can, in one country – however important that country.

Successful social democracy needs to be international, and that means, for starters, it must work in the EU. It is time for Labour and British unions to re-address these European issues.  They will not go away.

John Monks is a Labour member of the House of Lords and former general secretary of the European Trade Union Confederation
This is a contribution to Policy Network's work on Globalisation and Governance.

Tags: John Monks , trade unions , Germany , UK , Labour , SPD , Angela Merkel , DGB , European Trade Union Confederation , austerity , minimum wage , political economy

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The Policy Network Observatory promotes critical debate and reflection on progressive politics. It is centre-left orientated but determinedly challenges social democracy. It is pro-European but restlessly questions EU institutions and practices.

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