babble home
rabble.ca - news for the rest of us
today's active topics


Post New Topic  Post A Reply
FAQ | Forum Home
  next oldest topic   next newest topic
» babble   » current events   » national news   » Germany's Stagnant Economy: What Happens When Unions Get Their Way?

Email this thread to someone!    
Author Topic: Germany's Stagnant Economy: What Happens When Unions Get Their Way?
prowsej
rabble-rouser
Babbler # 798

posted 29 April 2003 06:43 PM      Profile for prowsej   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Mr Schröder is struggling to push through unpopular measures aimed at making the labour market more flexible, cutting unemployment-benefit entitlements and slashing the cost of Germany’s expensive welfare state....On the day Mr Schröder issued his warning, his government yet again cut its growth forecast for this year, to 0.75%....Now there are reports that one of Germany’s biggest and most prestigious industrial firms—Infineon, a microchip maker—is thinking about shifting its headquarters out of the country—a response to the high costs employers face in Europe’s largest economy. Mr Schröder has, belatedly, grasped the extent of the changes needed to make the German economy more business-friendly and more dynamic. It is harder to hire and fire in Germany than in many other European countries, and employers face substantially higher costs because of the additional welfare contributions they must pay for their workers. These burdens discourage firms from hiring workers in the first place, which explains why so many Germans are out of work. They also make it more difficult for companies with large workforces to restructure and improve their competitiveness.

The Economist is arguing that Germany's high unemployment and low GDP growth are a result of an overly generous welfare state. It is true that unions increase unemployment (though there is dispute over the extent of such increases). Unions in Germany want more taxes on the rich; they would prefer that the government raise taxes on inheritance and capital gains. I do not think that such progressive taxation would improve the economy in the long run, rather it would be a short term measure which would ensure that the welfare state could continue for a few more years.

Is there no alternative? Are the demands of unions inherently at odds with economic growth? What is a solution for Germany?

[ 29 April 2003: Message edited by: prowsej ]


From: Ottawa ON | Registered: Jun 2001  |  IP: Logged
Thehellyousay
rabble-rouser
Babbler # 3996

posted 29 April 2003 06:55 PM      Profile for Thehellyousay        Edit/Delete Post  Reply With Quote 
The Germans, like most Europeans, are not as productive as their counterparts in the US. I believe they get 5 weeks holiday as a national standard. They don't work as hard, but they don't have as much disposable income either. Increasing productivity is going to be a double edged sword. The unions will suffer, but by and large, people will have more money to spend as their productivity goes up.
From: AB | Registered: Apr 2003  |  IP: Logged
DrConway
rabble-rouser
Babbler # 490

posted 29 April 2003 06:59 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post  Reply With Quote 
The United States had progressive, sharply progressive, income taxes in the 1950s and 1960s. Did it experience economic stagnation? Nooooooooo. In fact, its economy went gangbusters.

You know, prowsej, I think we've been over this before, too. I have elsewhere noted that the thing a lot of people ignore is the very restrictive monetary policy the Deutsche Bank (now the ECB, effectively) enacts over all of Euroland.

This is one of the weaknesses Europe (and Germany in particular - although all of the Euro bloc essentially experiences the same structural problems as Germany) faces because the restrictive monetary policy forces continental Europe to accept high unemployment as the price for low inflation, while the compounding factor is that real wage growth has been stagnating due to lower productivity growth, which has been handled differently in the USA vs Europe; Europe's policy mix has opted for preserving real wage gains at the cost of labor market rigidity, while the US's policy mix has opted for deregulating the labor market to promote employment at the cost of stagnant wages.

It is instructive to note thus:

Norway is not in the Euro bloc and so has retained its own currency, and thus its own monetary policy. The exchange rate, in effect, acts as an insulating buffer to allow Norway to pursue its own policy mix without having to act inside of a straitjacket.

(The Euro is 1 to 1 with the US dollar; The Norwegian kroner is about 10 to 1 with the US dollar.)

Another thing that annoys me about that Economist article is the way it presents the whole issue as a matter of macho "grasping the nettle", or "braving the wind" in order to "tackle the structural problems for the good of the country", never mind that doing so would do more harm than good.

Of course, it's always the fault of those damn workers, right? Always wanting a better deal for themselves (just as business owners do, too, but when business owners want a better deal for themselves the government practically falls all over itself to lay down like a doormat to be scuffed upon, and the pro-business media trumpets the virtues of capitalism.) so they don't get run half-ragged to death by some CEO who wants to see the stock options go up another quarter point.

Furthermore, an instructive example of the cultural differences involved:

A Swedish pharmaceutical company - Upjohn, I believe - merged with an American pharmaceutical company (I forget the name). The American CEOs presented a "game plan" for the merger which, of course, began and ended with predictable large job cuts and massive pay raises all around for the upper management.

The Swedish CEOs were simply aghast at the glee and the gusto with which the American CEOs relished screwing thousands of workers.

[ 29 April 2003: Message edited by: DrConway ]


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
tyoung
rabble-rouser
Babbler # 3885

posted 29 April 2003 07:14 PM      Profile for tyoung        Edit/Delete Post  Reply With Quote 
You guys know more about the economics than I do, for sure, but when doc says:

quote:
Europe's policy mix has opted for preserving real wage gains at the cost of labor market rigidity, while the US's policy mix has opted for deregulating the labor market to promote employment at the cost of stagnant wages.

don't real wage gains suggest a greater potential for economic improvement than stagnant wages? Even though a few more people may be working in doc's second case, how much is their extra work actually contributing to the economy? When we pay people less, they buy less stuff that is non-essential, and the economy suffers. Paying people more is a benefit to the economy right where those people live.

The "demands of workers" to get paid fairly for their time and energy, so that they can spend that money in their local economy does not seem to be "at odds with growth" as suggested by prowsej, but rather at odds with excessive corporate profits that are bolstered when the unions can be busted. If business negotiated with and paid workers fairly (the same workers who make the profits possible, and purchase the product), the economy would benefit from both the increased spending those workers engaged in and an environment of security for investors. Happy workers are generally more productive, and adequate profits can be made with unionized labour.

edits: spelling

[ 29 April 2003: Message edited by: tyoung ]


From: Vancouver Island | Registered: Mar 2003  |  IP: Logged
Markbo
rabble-rouser
Babbler # 124

posted 29 April 2003 07:30 PM      Profile for Markbo     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
I believe they get 5 weeks holiday as a national standard.

When I was walking on along lake Constance in Germany I came across a sort of health spa. I asked what it was and they told me that workers can apply for several weeks of spa for "stress relief" which is in addition to any vacation time.

I think its a matter of balance, we work too much, they work too little.

[ 29 April 2003: Message edited by: Markbo ]


From: Windsor | Registered: Apr 2001  |  IP: Logged
Hawkins
rabble-rouser
Babbler # 3306

posted 29 April 2003 08:09 PM      Profile for Hawkins     Send New Private Message      Edit/Delete Post  Reply With Quote 
That is for public service workers.

I don't know if they work too little though. I think they have a lot less stress in living and get a lot more out of it. Europe seems more calm then in North America, sorta flows more.

Though I am not an economist and have not following the business part of Europe. But then again the US economy isn't doin so great either...


From: Burlington Ont | Registered: Nov 2002  |  IP: Logged
lagatta
rabble-rouser
Babbler # 2534

posted 29 April 2003 08:25 PM      Profile for lagatta     Send New Private Message      Edit/Delete Post  Reply With Quote 
Funny, Germans hardly strike me as a bunch of slackers with an allergy to work. They are always on time and very serious at meetings, I can tell you that.

In general, Western European workers I've met are utterly horrified at how little paid holiday North American workers get. Germany hardly strikes me as a country where people seem poorer than they do in North America, in general people seem better off, without the extremes of wealth and poverty one sees in the United States.

Admittedly I haven't been much to the depressed areas in the former East Germany. Remember that the Bundesrepublik's decision to rapidly integrate the East had an utterly huge economic cost.

I believe all German workers have access to spas for medical reasons.


From: Se non ora, quando? | Registered: Apr 2002  |  IP: Logged
Markbo
rabble-rouser
Babbler # 124

posted 29 April 2003 09:00 PM      Profile for Markbo     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
I believe all German workers have access to spas for medical reasons.

Granted, just a point of information about a benefit that we don't receive over here.

I never said they were slackers, just that they have a lot more benefits and time off than we do.

Its just that there has to be some limit.


From: Windsor | Registered: Apr 2001  |  IP: Logged
Hawkins
rabble-rouser
Babbler # 3306

posted 29 April 2003 09:55 PM      Profile for Hawkins     Send New Private Message      Edit/Delete Post  Reply With Quote 
Personally I like their limit more .
From: Burlington Ont | Registered: Nov 2002  |  IP: Logged
Markbo
rabble-rouser
Babbler # 124

posted 29 April 2003 09:56 PM      Profile for Markbo     Send New Private Message      Edit/Delete Post  Reply With Quote 
Of course you do, I'd like to be paid a full year salary for only working 2 weeks and having 50 off. But I'd sacrifice job security when another company underbid me. And thats what they're doing now
From: Windsor | Registered: Apr 2001  |  IP: Logged
Youngfox
rabble-rouser
Babbler # 3750

posted 29 April 2003 10:22 PM      Profile for Youngfox   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
It is strange how people might see the very civilized European workweek model as slacking.
In countries like Germany people work to live whereas North Americans live to work. Our perceived time to relax is upon retiring when, even then, many here exist on fixed shoestring incomes and sometimes fall through the cracks anyway. It would be nice to be able to have decent amounts of time for family interaction, self-improvement and all-important travel while one is still young and able. Perhaps the billions of dollars North Americans spent chemically dulling their senses with pharmaceutical antidepressants would not be so prevalent if our working years had decent moments for reflection, relaxation and self-fulfillment beyond the acquisition and costly maintenance of materialist status symbols. I suppose the differences are reflected in the contrasting attitudes of European and North American consumer cultures.

From: - | Registered: Feb 2003  |  IP: Logged
lagatta
rabble-rouser
Babbler # 2534

posted 29 April 2003 10:48 PM      Profile for lagatta     Send New Private Message      Edit/Delete Post  Reply With Quote 
Youngfox, I presume you are referring to the hours shops are open?

I confess I rather warm to the idea of fun-loving, slacker Germans. - almost as much as anti-militaristic, pacifist Germans - really enjoyed a nice young man who looked like an ad for the Aryan race talking to me in a heartfelt manner about the horrors of racism and anti-semitism, at a European Social-Forum type thing.

Michelle, how about messy housekeeper Germans? Is that possible?


From: Se non ora, quando? | Registered: Apr 2002  |  IP: Logged
muggetywumpus
rabble-rouser
Babbler # 3952

posted 29 April 2003 10:50 PM      Profile for muggetywumpus        Edit/Delete Post  Reply With Quote 
Yes.
From: Coquitlam | Registered: Mar 2003  |  IP: Logged
WingNut
rabble-rouser
Babbler # 1292

posted 29 April 2003 10:54 PM      Profile for WingNut   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
And the anti-union, give-all-yer-money-to-the-needy-rich, US economy is just steaming along, right?

No?

It must be because there are not enough powerful unions and too many tax breaks for the rich.

You gotta love economics. You can just make it up and people swallow it without any need for support.


From: Out There | Registered: Aug 2001  |  IP: Logged
Markbo
rabble-rouser
Babbler # 124

posted 29 April 2003 11:04 PM      Profile for Markbo     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
It is strange how people might see the very civilized European workweek model as slacking.

Put it this way, whats the upper limit you would put on how many vacation weeks a worker gets before its too much?

quote:
Our perceived time to relax is upon retiring when, even then, many here exist on fixed shoestring incomes and sometimes fall through the cracks anyway.

Well that retirement plan doesn't work too well. CAW members get among the most time off of any industry but they average collection of pension is only 18 months before death.

quote:
Perhaps the billions of dollars North Americans spent chemically dulling their senses with pharmaceutical antidepressants would not be so prevalent if our working years had decent moments for reflection, relaxation and self-fulfillment beyond the acquisition and costly maintenance of materialist status symbols.

I'd betcha that the correlation of antidepressants to amount you work is the complete opposite of what you assert here.

quote:

And the anti-union, give-all-yer-money-to-the-needy-rich, US economy is just steaming along, right?
No?

Hey compared to the rest of the world, they're unemployment rate is pretty impressive. Whats the German unemployment rate? Whats their economic growth this year.

Yeah, its amazing that a slowdown in growth is seen as negative. A recession is negative, not 2% growth.


From: Windsor | Registered: Apr 2001  |  IP: Logged
Doug
rabble-rouser
Babbler # 44

posted 30 April 2003 12:55 AM      Profile for Doug   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
What's Sweden's unemployment rate? Let's see...
4.6% and the unionization rate? 89%. Now how could THAT possibly happen.

From: Toronto, Canada | Registered: Apr 2001  |  IP: Logged
Markbo
rabble-rouser
Babbler # 124

posted 30 April 2003 01:11 AM      Profile for Markbo     Send New Private Message      Edit/Delete Post  Reply With Quote 
Well according to this their 5.1% unemployment rate as of 2001 was obtained by having 34% of their population working for the civil service.

quote:
An overinflated civil service (with 34% of the whole working population) as well as persisting collectivist and corporatist structures are a hindrance to a further restructuring of the country's economy. As a result of globalization large enterprises transfer parts of their operating units abroad (Ericsson, for example, to London). Others have moved their headquarters to Finland after mergers (Nordbanken and the paper manufacturer Stora). Enterprises of international renown such as IKEA and Tetra-Pak years ago moved their headquarters abroad for tax reasons.

But it sounds like their main achievements were from:

quote:
Following one of the severest economic and financial crises of the 20th century at the beginning of the nineties a comprehensive austerity programme was carried out, including even a far-reaching reform of the old-age pension system.

Lets see if they can maintain their economy with their tax policy and civil service. I'd bet against it.


From: Windsor | Registered: Apr 2001  |  IP: Logged
Willowdale Wizard
rabble-rouser
Babbler # 3674

posted 30 April 2003 01:14 AM      Profile for Willowdale Wizard   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
i had severe back pain in germany when i lived there in the summer of 1999. within a few weeks, i had seen a general practice doctor, seen a specialist, had three injections in my back and was starting state-paid-for Krankengymnastik (gotta love the words) -- exercises for my back to strengthen it.

this idea that swift universal health care and five weeks vacation making people unproductive is hooey. why does it make people more productive to live in the US and have two weeks vacation and 40 million uninsured? productive because they fear being out of work? that's people's idea of the good, the ideal society?


From: england (hometown of toronto) | Registered: Jan 2003  |  IP: Logged
Markbo
rabble-rouser
Babbler # 124

posted 30 April 2003 01:23 AM      Profile for Markbo     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
that's people's idea of the good, the ideal society?

I don't know anyone who suggested the U.S. being the idea of the good, ideal society. Personally I think Canada with a bit of tweaking is. However I think the German model for education being co-oped with businesses should be looked at. Our idea of improved health care should not be limited to throwing money at the problem and actually implementing reforms such as greater funding for nurse practitioners.


From: Windsor | Registered: Apr 2001  |  IP: Logged
Youngfox
rabble-rouser
Babbler # 3750

posted 30 April 2003 01:50 AM      Profile for Youngfox   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
As a former Teamster who has nothing good to say about the execution of that bloated organization, I still believe that unions are essential in order to maintain social equity. I also believe that a shorter workweek would allow more people to enter the work force and vastly improve the quality of life for all workers. As to the German economic downturn, I do not believe that unions and compassionate social programs are the flies in the ointment. Economics are usually manipulated and defined by a small section of society that despises an empowered, tolerably compensated workforce.

quote:
a nice young man who looked like an ad for the Aryan race

Lagatta, what is an Aryan supposed to look like? Are you refering to the fascist fantasy or the historical definition?

From: - | Registered: Feb 2003  |  IP: Logged
lagatta
rabble-rouser
Babbler # 2534

posted 30 April 2003 02:53 AM      Profile for lagatta     Send New Private Message      Edit/Delete Post  Reply With Quote 
Oh, I meant the fantasy, of course. Tall, blond, that sort of thing. Of course I know historical Aryans looked nothing like that...
From: Se non ora, quando? | Registered: Apr 2002  |  IP: Logged
TommyPaineatWork
rabble-rouser
Babbler # 2956

posted 30 April 2003 03:28 AM      Profile for TommyPaineatWork     Send New Private Message      Edit/Delete Post  Reply With Quote 
I look at our paltry stat holidays and think there's something we could learn from the Germans.

And-- unwaranted stereotype or not, I wish the rest of this freakin' country got it through thier thin non-Germanic skulls that being late, keeping people waiting, is just plain rude.

Criminey, get your shit together.

*ahem* Where was I?

Oh yes. Germany.

Germany has few unions. Canada has a whole bunch; a remnant of the AFL-CIO chasing subsidiaries north of the border in the 30's, 40's and 50's.

Clearly, there are too many unions in Canada, and we'd all be better off if we merged into maybe three or four big ones.

But we won't because the CLC are a bunch of dweebs.

......and I bet there hasn't been a CLC meeting that ever started on time.....


From: London | Registered: Aug 2002  |  IP: Logged
kiowa
rabble-rouser
Babbler # 3597

posted 30 April 2003 03:42 AM      Profile for kiowa     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Clearly, there are too many unions in Canada, and we'd all be better off if we merged into maybe three or four big ones.


Whoa, dude. I can't speak for Canadians but I can say there there are not enough unions in the US. It's hard enough dealing with the US military, which paradoxically both fights on behalf of democratic principles and is itself one of the most "totalitarian" organizations on the planet. The Army is in some respects like one giant union (just try getting your ret. benefits in order


From: Pax Americana | Registered: Jan 2003  |  IP: Logged
beluga2
rabble-rouser
Babbler # 3838

posted 30 April 2003 03:48 AM      Profile for beluga2     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
I look at our paltry stat holidays and think there's something we could learn from the Germans.

Tell me about it. I don't even get stat holidays, period. Christmas, Easter, New Year's Day -- they're all just another day's lost pay to me. (I work in the courier industry, so I'm classified as "self-employed," which is just a fucking scam so my EMPLOYER can get out of paying what would be due to me if I was an "employee.")

No doubt if those assholes at the Economist had their way, every worker would be like me: no holidays, no benefits, no minimum wage, nada.

Believe me, if it weren't for the language barrier, I'd fuck off in a minute from the neocon nightmare Canada is becoming, and go live in Germany or Denmark or Holland or some other civilized country.


From: vancouvergrad, BCSSR | Registered: Mar 2003  |  IP: Logged
TommyPaineatWork
rabble-rouser
Babbler # 2956

posted 30 April 2003 03:55 AM      Profile for TommyPaineatWork     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Whoa, dude. I can't speak for Canadians but I can say there there are not enough unions in the US.

Both nations could stand some more unionization but not more unions.


From: London | Registered: Aug 2002  |  IP: Logged
beluga2
rabble-rouser
Babbler # 3838

posted 30 April 2003 04:35 AM      Profile for beluga2     Send New Private Message      Edit/Delete Post  Reply With Quote 
Damn right! Where do I sign my union card?
From: vancouvergrad, BCSSR | Registered: Mar 2003  |  IP: Logged

All times are Pacific Time  

Post New Topic  Post A Reply Close Topic    Move Topic    Delete Topic next oldest topic   next newest topic
Hop To:

Contact Us | rabble.ca | Policy Statement

Copyright 2001-2008 rabble.ca