Germany's Unions Face Decisive Moment

The chairman of Germany's DGB trade union federation, Michael Sommer, was all smiles as he stood side by side with Chancellor Gerhard Schröder last week at the DGB headquarters. Just months ago, the two wouldn't even shake each the other's hand after the bitter recriminations that were thrown from both sides over welfare and labor market reforms put in place by Schröder.

At the kiss-and-make-up session, however, Sommer was, while not commanding, strongly suggesting that Germany's trade union members vote for Schröder and keep the current Social Democratic-Green coalition in power for four more years.

"It's about nothing less than determining the future of this society," Sommer said.

In the back of his mind, however, he might have been thinking about the future of Germany's trade union movement, which is looking more uncertain these days, especially if a coalition of Angela Merkel's conservative union bloc and the free-market liberals (FDP) form the next government.

While Sommer had his problems with his traditional allies -- Schröder's Social Democrats, whose reforms were seen as "socially unjust" -- the alternative looks even worse. In these somewhat desperate times, better to go with the lesser of two evils.

"If the majority of voters vote for the Union and the FDP, these parties could attempt to break the back of the unions, like Margaret Thatcher did in Great Britain," Sommer told the Tagesspiegel newspaper. And while once unions in the UK were mighty forces, today they are but a shadow of their former selves.

"Unions lost that fight (over reforms)," said Hagen Lesch, an expert on wage policy at the Cologne Institute for Economic Research. "The thinking is to hang on to what they have now."

Traditional force

Trade unions in Germany have traditionally been a powerful force in the labor market. Unions, in often tough negotiations with employers, set wage agreements that apply to entire sectors of the labor market. In the postwar era, that has translated into regular pay increases for workers, generous holiday and sick-time allowances, and labor conditions that are the envy of much of the world.

But things have changed on the labor landscape and the once shining reputation of German trade unions is looking tarnished. The country's unemployment rate, which has been rising since the 1970s and is now at almost 12 percent, seems impossible to get down.

The pressures of globalization and the outsourcing of many manufacturing jobs means the traditional models -- a job for life, an ever-increasing standard of living, cradle-to-grave security -- are proving unsustainable. The economy is stuck with anemic growth rates and often hovers just above recession.

Economists, business leaders and some politicians have been calling for reform, for more self-responsibility, more flexibility and less government intervention and state support.

Unions have resisted those appeals, claiming they hurt workers, and have begun to be seen -- depending on which side of the labor and political spectrum one stands -- as roadblocks to growth or protectors of the common man. However, among the political classes, the former category of opinion appears to be in the ascendant.

Change, it is a-comin'?

The conservative CDU party, led by Angela Merkel, who is likely to become Germany's next, and first female, chancellor, has said the unions will likely be looking at change if she forms the next government.

She wants to take away some of their most cherished power -- that of setting sector-wide wage agreements -- and allow staff and management at individual companies to decide if they want to determine their own pay scales. Merkel has said she wants Germany to continue to have strong unions, but that they should be more flexible.

"One can't say you're for a strong union and at the same time, erode wage autonomy. That's a contradiction," said Hans-Joachim Schabedoth, head of the policy department of the DGB.

According to him, conservatives are playing a dangerous game in attempting to eviscerate union power. History has shown, if a government wants to maintain a majority, or its popularity, it has to pay attention to union interests, he said. The current anti-union strategy was going against the best interests of the larger society, he added.

"Our role is to ensure that people benefit from their own work and that social questions are considered in the larger economy so that social problems don't grow," he said. "Therefore we're worried about the current state of things."

Overall decline

But the role of unions, in the minds of the populace at least, seems to have lost of its importance. De-unionization has been a phenomenon over the past two decades all over the world. Since the 1980s, the share of wage earners who are also union members has declined in all but a few countries.

In Germany, the trend is the same. Membership of the DGB's affiliated trade unions dropped by nearly 5 percent in 2004 and is now at just over 7 million. Unions also face the problem of an aging membership, which does not portend well for the future. Membership of young people (16-25) within the DGB dropped considerably from 15 percent in the early 1980s to about 5 percent today.

That slow decline could be revved up considerably after Sunday's vote, should the center-right and the free-market liberals prove triumphant. If unions lose their main power position -- the setting of sector-wide wage agreements -- it could well cause many workers to reconsider their union memberships and spend their dues money elsewhere.

Other considerations by Merkel & Co., such as loosening job protection laws, liberalizing store opening hours, and rethinking policies on worker participation in company management, if they go through, would also be defeats for unions and could further push them to the periphery of a Germany that appears to be embarking on a more free-market course.