Germany’s trade unions. Ever weaker

Date: 06/09/03

The decline of organised labour may not be entirely to Germany's advantage

IS THE chancellor, Gerhard Schröder, heading for a real bust-up with the trade unions, like Margaret Thatcher and Ronald Reagan in the 1980s? If you listen to Jurgen Peters, who has just been elected chairman of IG Metall, the engineering union that is the country's most powerful, you might think so. A punch-up with the government is “unavoidable”, says Mr Peters, if it dared, for instance, to allow more local exceptions to industry-wide wage deals.

Yet such fighting words will probably not add up to anything more than the meagre protests earlier this year against the government's reforms. This is because the power of IG Metall in particular and the German trade unions in general is eroding - so quickly that some experts, even on the business side of the bargaining table, are worrying that the country's famously peaceful labour relations may suffer.

One reason for the decline of Germany's trade unions is economic. Since 1991, the membership rate among workers has dipped from 32% to 20%. Even in the western part of Germany, most firms no longer adhere to industry-wide wage agreements. Many others make use of “opening clauses”, which let hard-pressed companies temporarily impose longer working hours or lower wages; unsurprisingly, real pay rises have lagged behind formally negotiated increases by a cumulative 12% in the past ten years.

More important is the union's loss of political influence, even in the past six months. In March, when Mr Schröder announced his ambitious reform plans, the unions were still seen as the main force that could mess things up. But then in June came the failure of an IG Metall strike for a shorter working week in eastern Germany. That humiliating defeat may well turn out to be as historically significant for Germany's unions as Mrs Thatcher's victory over Arthur Scargill and the miners.

So unions have played hardly any part in the debate about the country's reforms. Moreover, they are at odds with themselves. It was notable at its congress that IG Metall not only elected the hardline Mr Peters as chairman but also the more reformist Berthold Huber as his deputy. Both got only tepid support. Mr Peters won only 66% of votes, the weakest-ever endorsement of a new IG Metall leader.

All this cheers up Mr Schröder, who has let it be known that he intends to run again at the general election in 2006 (alongside his Green foreign minister, Joschka Fischer, who has thus signalled that he no longer wants to become the EU's foreign minister, at least for now). Whether weak unions are good for Germany remains to be seen. They have helped to preserve industrial harmony in the past. Between 1992 and 2001, the country lost a mere nine working days a year per 1,000 workers to strikes, against 22 days in Britain and 48 in the United States. If the unions slump too much, Germany may lose one of the few competitive edges it still has.

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