IG Metall's Future Hinges on Wage Talks

Just after the stroke of midnight last Thursday, more than 16,000 metalworkers from DaimlerChrysler to Airbus laid down their tools in the first major wave of "warning strikes" by IG Metall, Germany's second-largest trade union.

The strikes came on the eve of the "hot phase" of annual wage negotiations. But after a difficult year for IG Metall that saw the union walk away with empty hands from a major strike in eastern Germany, a months-long power struggle among its leadership and a steady erosion of its membership rolls, 2004 is looking to be a decision year for IG Metall and its boss, Jürgen Peters.

The end of the 35-hour week?

The difference this year is that employers, with their eyes fixed on the popularity of the recent reform trend in Germany, are calling for an end to the 35-hour work week -- considered sacred by the union. If he is unable to come back to his workers with an acceptable offer, analysts believe Peters could be shown the door.

So far, employers are offering a wage increase in two stages -- each representing a 1.2 percent increase over a period of 27 months. Linked to that raise is a demand that companies be able to expand the work week from the current 35-hours to 40 hours. The proposal also leaves it up to the companies to decide whether to give workers extra pay for their overtime. IG Metall, on the other hand, is calling for a 4 percent pay hike during the next 12 months for its 3.4 million workers.

At the core of the negotiations is the question of the work week. If employers have their way, it would lay a major plank in the IG Metall platform to ashes. Previously, the union argued that a shorter work week would create additional jobs.

Union charges 'deceit'

As happens every year, unions and employers are firing and endless stream of charges and countercharges.

"We've told the employers and we demand again today that they tender a negotiable offer," Peters (photo) told German public broadcaster ARD. If the employers don't Peters has threatened, then a "row" with the union may be inevitable. In other media interviews, Peter has uttered the words "extortion" and "deceit" when describing the deal the employers have put on the table.

Still, Peters has indicated a willingness to renegotiate the "playing rules" for more flexible work hours with employers. With its proposed "working hours accounts," IG Metall is offering to split the 35 hour work week up in a way that would allow workers to be deployed at times when they are most needed. But employers say that would do little to reduce personnel overhead costs and are continuing to push for the union to abandon its 35-hour work week.

"We want to solve this costs problem without having to cut jobs and without having an impact on the monthly earnings of employees" said Martin Kannegiesser, head of the Gesamtmetall employers' association told the public radio station Inforadio Berlin-Brandenburg. But he argued that could only be possible with an extension of working hours. "When a company is in a difficult innovation and reorganization phase, which many companies are rapidly entering into, then today's working hours are no longer sufficient."

But the Social Democratic parliamentary group leader Franz Müntefering offered the union his support on Sunday. "The demand from employers for longer working hours for the same money is, in reality, a demand for reduced wages," Müntefering told the Welt am Sonntag newspaper.

Regional unions hint at flexibility

Though Peters, often seen as a hard-nosed traditionalist, has shown few signs he is ready to compromise on any major points, softer tones could be heard from the union’s regional branches.

Over the weekend, Jörg Hofmann, the head of IG Metall's influential Baden-Württemburg state chapter, which is home to some of Germany's biggest blue chip manufacturing companies including DaimlerChrysler and Porsche, told the Berliner Zeitung newspaper that the union would likely come up with a new counterproposal for employers in order to "take the air out of the debate of working hours." According to Hofmann, the working times of the union's members are already considerably flexible -- a point IG Metall hopes to get across in negotiation rounds this week.

Peters on the dock

If the union fails, the political costs could be considerable for Peters. When he took IG Metall’s top position last summer, many both within and outside the union had their doubts about whether he was the right person to lead IG Metall into the future. Peters, an old school leftist, remains a controversial figure after an ugly dispute over his role in organizing a disastrous strike last spring which sought to cut working hours of members in eastern Germany to 35 hours a week at time when unemployment in the region hovered at around 18 percent.

That started a power struggle between traditionalists and modernizers in the union who felt Peters wouldn’t be able to help IG Metall adapt to the realities of modern industrial Germany.

A new playing field

This time around, employers have come to the bargaining table with a stronger hand against which Peters’ aim of traditional union negotiations may not play well.

Following three years of diminished investment and a stagnant market, the German economy is now showing signs of recovery, with an uptick in investment expected in 2004. But the playing field has changed. With the European Union’s eastward expansion it will be easier for companies to invest in neighboring lands where wages and costs are lower.

"IG Metall would be well advised, especially after its debacle in the east to avoid strikes," Gesamtmetall deputy chief Otmar Zwiebelhofer told the newspaper Die Welt. "If it comes to general strikes, the wage landscape will look a lot different. Then many more firms will be able to leave (the employers’ associations). Then the unions wouldn’t have any employers left who were prepared or willing to negotiate."

Publicly, at least, Peters seems prepared for the fight. He has described the call for unpaid extended working hours as "brazen" and alleged that it would sink wage costs by 14.5 percent and threaten as many as 400,000 jobs in the sector.