Few Jobs in Germany as Economy Slips

By Naomi Craine, Militant, Vol.60 no.4, 29 January 1996

German economic gloom grows, declared the front page of the Financial Times January 10. Newly released figures show that just two years into an upturn in the business cycle, Bonn is facing stagnation, growing unemployment, and a record number of insolvencies. The German economy is now just shy of an official recession. On this news, the value of the German mark slid against the U.S. dollar and other capitalist currencies.

The official jobless rate jumped to 9.9 percent in December, up from 9.3 percent the previous month. Nearly 4 million workers are unemployed in Germany, with another 2 million getting by on government-funded work programs. Many of the unemployed don't show up in the statistics, including older workers who have been pushed to take early retirement and the high percentage of women who have been laid off.

The same day the December unemployment figures were released, private economists announced that the German economy contracted by as much as 1 percent in the fourth quarter of 1995. The growth rate was zero in the third quarter. The German Institute for Economic Research in Berlin, known as DIW, issued a report projecting a mere 1 percent growth rate for 1996. Business insolvencies were up 11.3 percent in October, compared to September, and are projected to total a record 28,000 in 1995.

Probes against wages, conditions

The employers and government have intensified their attacks on workers' wages, conditions, and social benefits, blaming the economic pinch. Klaus Murmann, head of the bosses' association BDA, floated a demand January 2 for what he called a three-pillar system of wage agreements. The scheme called for workers' pay to be based not on an industry-wide standard, but on each company's profits and individual workers' performance. Union officials denounced the plan as reactionary.

Murmann's probe came less than two months after the labor officialdom offered an alliance for jobs that would freeze real wages in return for the employers' pledge to create 330,000 jobs over three years. German chancellor Helmut Kohl welcomed the concession plan. He is scheduled to meet with union officials and the bosses' representatives later in January.

The alliance for jobs pact was first proposed by the president of IG Metall, the metalworkers union. The industry bosses, through their Gesamtmetall association, countered with a collective emergency program that includes holding the line on pay, lower wages for new hires, more flexibility in work schedules, and less industry-wide bargaining. The DIW joined the chorus, urging IG Metall to renegotiate the generous pay and conditions agreed for the metalworking industry this year, as the Financial Times put it.

Thirty thousand metalworkers struck in eastern Germany, and 200,000 workers demonstrated across the country, in 1993 to demand the national wage parity that was promised following reunification of the country.

Other economic figures released in January showed Germany's budget deficit stood at 3.6 percent of economic output, 0.6 percent higher than the European Union ceiling set by the Maastricht treaty. German finance minister Theo Waigel vowed January 9 that this year Bonn would come in under the 3 percent mark. The deficit limit is a requirement for joining the European Monetary Union that is supposed to begin in 1999.

Waigel blamed the deficit on overly high spending by state governments and on the cost of the social security network. He said the federal government will attempt to impose a moratorium on higher spending by the state administrations this year, and will push to privatize public sector industries such as water, garbage collection, and electricity.

Unemployment in eastern Germany continues to be much higher than in the west. The official jobless rate is nearly 15 percent there, and the actual rate considerably higher. Only 35 percent of east Germans have a regular, full-time job.

Crisis worse in east Germany

While the business press has bragged of somewhat faster growth of the economy in east Germany, the figures are illusory. In large part it is based on a construction boom that followed the reunification of Germany in 1990, which is largely exhausted. Much to the dismay of big business in Germany, stable capitalist property relations have not taken hold in the east German workers state.

Industrial output has collapsed in the region. In eastern Berlin, for example, which has a population of 1.3 million, the number of industrial jobs has dropped from 180,000 to 33,000 in the last six years. The Treuhand privatization agency has closed or restructured many enterprises deemed by potential capitalist investors as incapable of making a sufficient profit. Charged with selling off some 8,000 enterprises—from which the capitalists in west Germany projected a profit bonanza—the Treuhand has come out 270 billion marks in the red, dragging down the German economy as a whole.

Bonn's economic crisis, which follows massive protests by workers in France against the government austerity drive there, has the ruling classes throughout Europe worried. There are now 14 million workers unemployed in Europe. A business article in the January 10 New York Times fretted, European nations risk a kind of social problem not seen in decades—structural poverty and the threat of social unrest.

Stefan Schneider, an investment economist in Frankfurt, told the Wall Street Journal, Technically we aren't in a recession and we aren't going to get one. But we're damn close.