A well-coordinated action in the Law Firm: crisis management – economy

The big table in the Chancellery is occupied on July 4, when Olaf Scholz resurrects the format from the old Federal Republic. At the invitation of the Federal Chancellor, eight representatives of trade unions and business associations as well as the president of the Bundesbank and the economist meet for a joint action. The ministers for finance, economy and labor and social affairs are also present.

Karl Schiller came up with a joint action

This is not as unusual as Scholz said when presenting his idea to the Bundestag in early June. In February 1967, the Federal Minister of Economy Karl Schiller (SPD) launched the first joint action as a new crisis management instrument. West Germany’s economy weakened after years of economic boom, and the political system changed after the fall of Erhard’s government. For the first time, the SPD sat at the cabinet table, and with Schiller, Keynesian economic policy became fashionable: the state wanted to influence the economy, and the grand coalition passed the “Law on Economic Stability and Development”.

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“The immediate goal of the joint actions was initially to combat inflationary tendencies and to rapidly reduce rising unemployment,” writes the sociologist Wolfgang Schröder of 1967. Today? “In a crisis, it is worth trying to find a reasonable voice. Because none of the actors alone can contribute to overcoming the multiple crisis, ”Schröder told Tagesspiegel. “Nobody currently has an answer to the distribution questions that are bringing with them high price increases.”

No wage negotiations in the Law Firm

The federal chancellor himself explained the invitation by July 4 with a clear purpose. “Together with the social partners, we want to talk about how we deal with the current price developments.” You have an ’emergency effort’ ahead of you, but of course politicians want to stay out of wage bargaining. Despite this statement, employers’ associations and trade unions instinctively emphasize the autonomy of collective bargaining. “Collective bargaining is not conducted in the chancellery,” said DGB chairman Yasmin Fahimi, reminding her party friend Olaf Scholz. “Employers’ associations and trade unions have always acted constructively to find solutions to previous crises,” said employer president Rainer Dulger, commenting on the revival of joint action. “We’ll do it this time too.” But how?

Economy Minister Karl Schiller (fourth from left) welcomed employers and trade unionists in 1967, including industry president Fritz Berg (third from right) and IG Metall chief Otto Brenner (left of Schiller).  Photo: Imago


Economy Minister Karl Schiller (fourth from left) welcomed employers and trade unionists in 1967, including industry president Fritz Berg (third from right) and IG Metall chief Otto Brenner (left of Schiller).
© Imago

Scholz wanted to invite the social partners as soon as possible, but IG Metall CEO Jörg Hofmann asked for a postponement until the beginning of July, as the largest German trade union would not finally decide on wage demands for almost four million metalworkers until the end of July. end of June. The first recommendation of the IG Metall management board appeared on Monday, which should be around 7.6 percent. If you start the race with 7.6 percent, you’ll end up with five percent. Even the most assertive union cannot stabilize the purchasing power of its members; an inflation rate of seven percent overwhelms collective bargaining policy. So the state is at stake. And joint action.

“The wage discipline does not work”

“Wage discipline did not work either in the first Concerted Action or later in the Alliance for Labor,” says sociologist Schröder. In nine rounds of collective bargaining between 1967 and 1976, the annual wage increases in the leading sector, the metal and electrical industries, were four years below the indicative dates for concerted action. This joint action meant “thus no fundamental prejudging of collective bargaining policy,” states Schröder. Nevertheless, 2022 will again be about income, inflation and labor costs.

“Bridging Payment” in the Chemical Industry

Chancellor Scholz identified the chemical industry as a role model: in early April, the negotiating parties agreed on a “bridging payment” of EUR 1,400 for 580,000 chemical workers as a temporary replacement for a permanent percentage wage increase. With a one-off special payment, high prices would be “quickly and to a large extent compensated,” said Scholz. In October, the chemical collective bargaining partners continued their negotiations in parallel with the metal workers. Until then, a joint action meeting should be arranged, for which Scholz is planning three meetings until late summer.

Crown Bonus Restoration

The Chancellor envisages the reintroduction of the crown bonus with the following effect: the social partners agree to special payments that are tax and duty free and contain a percentage increase. The Verdi public sector collective agreement from last November is a prototype of this: 1.1 million workers in the Länder will receive a one-off payment of € 1,300 in early 2022 and only 2.8 percent more money by the end of 2022.

The one-time payment disappears quickly, the prices remain

This is problematic for workers as a one-time payment is eaten up quickly, but prices remain high. That’s why unions are insisting on wage percentages this year after modest years of the pandemic, just as they did in the steel industry with 6.5 percent. However, the highest wage contract in 30 years is still below the inflation rate. Therefore, on July 4, the social partners will be demanding tax money for their clients: easier short-time working regulations and financial aid from the state to compensate in particular for energy costs, and in total a third discount package, which will run into the next year. The federal government is taking over part of purchasing power equalization – to ease the burden of collective bargaining policy, strengthen the economy and help poor households.

The alliance has failed and Agenda 2010 has emerged

Corporate systems, in which politics, business and trade unions work together for the good of the whole, dealt better than other economies with the oil price shocks of the 1970s and the 2008/09 financial crisis. In an industrialized country of Germany, a successful coordinated action could create a link to a medium-term modernization strategy that goes beyond the acute crisis policy for which Scholz has created an “Alliance for Transformation” with actors similar to those in joint action.

Finding a compatible course is an effort. “In the beginning there was a lot of euphoria, then there was disappointment and overload of the format with additional topics, and finally a hangover – both in 1977 and in 2003” – sums up the political scientist Schröder. the course of the first concerts of the campaign and the alliance for work, the failure of which was a prerequisite for the 2010 Agenda of the Schröder government. Olaf Scholz knows about it.

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