Germany braces as workers prepare to strike

Germany's public-sector workers seem poised to launch a crippling strike for the first time in more than a decade, highlighting a growing gap between the Social Democratic-led government and its traditional allies in the trade unions.

Trade unions provided key support for Chancellor Gerhard Schröder's reelection campaign last September. But they are critical of his efforts to reform everything from Germany's economy and labor market to its healthcare and social security systems.

A drawn-out strike could hurt Germany's limping economy and undermine Mr. Schroeder's ability to push through reforms. It could also test the strength of Germany's once-vaunted unions.

"Union influence is weakening," says Peter Lösche, political scientist at Göttingen University. "The unions are the traditionalists in society, while in large parts of the SDP it is now accepted that far-reaching economic reforms are necessary."

Rallying a frustrated army of trash collectors, school teachers, police and firefighters, ver.di, Germany's largest trade union, is demanding a 3 percent increase in public-service wages for nearly 3 million workers by April 2004. These wage talks are a key test for ver.di and its boss Frank Bsirske, who is bent on proving the new labor conglomerate - formed last year by a merger of five trade unions - has clout.

Government employers, who made a last-minute offer Monday of a 2.8 percent wage increase over two years in exchange for extended working hours, say they cannot afford to meet ver.di's demands. A new round of talks on Wednesday is the last opportunity to avert a strike.

"Both sides have to move," said Hinrich Lehmann-Grube, an arbitrator who tried over the weekend to broker a compromise. "If both sides refuse to budge, a strike is unavoidable."

The creation of ver.di itself came in response to the waning power of Germany's unions. In 1994, the unions that made up the Federation of German Trade Unions boasted 9.8 million members. That number fell to 7.9 million in 2001. ver.di itself has only around 2.8 million members.

German public-service workers have gone on strike only twice since the end of World War II. The first, in 1974, lasted three days. A resulting wage increase of 11 percent was seen as the beginning of the downfall of Willy Brandt, the SDP chancellor at the time. Public service workers struck again in 1992, when a 12-day work stoppage that left streets piled high with garbage ended with a 5.4 percent wage increase.

Mr. Bsirske has been indicating that he expects an extended confrontation this time around. "This strike won't be over in three days. It will be a deep conflict," he said, drawing parallels between this year's battle and the 1974 showdown.

Such comments indicate how much the relationship between Germany's trade unions and the Social Democrats has changed from that of partners to sometime antagonists.

"Bsirske is in the process of becoming Schroeder's toughest opponent. Just as nearly 30 years ago, [union] boss Heinz Kluncker paved the way for the end of the Brandt era," wrote the daily Berliner Zeitung in a recent editorial comment.

But the looming strike is not the only instance where the unions and Mr. Schröder's government are at odds.

Just before Christmas, Schroeder drafted a strategy paper that proposed changes to the health-care and pension systems, measures opposed by the unions.

Rejecting the proposals, Ursula Engelen-Kefer, a senior official of the Federation of German Trade Unions who also sits on the SDP executive board, quipped: "At the moment, the important thing is to let the last pension reform take effect."

Tired of the government's austerity measures, trade unions also have been lobbying hard for a tax on wealth to make the rich carry a greater share of the cost of public budgets.

The wealth tax briefly won the support of some SDP governors, but was stopped in its tracks when Mr. Schröder instead introduced a tax on interest earnings that brought Germany in line with international standards.

Liberalizing Germany's outdated store closing hours is another battle ground for Mr. Schröder's government and the union.

Last month, the government proposed allowing stores to stay open four additional hours on Saturdays, until 8 p.m. ver.di immediately protested the change, saying it would cost more jobs than it would create. It also rallied 100,000 public workers last month in a series of wildcat strikes to press its demands.

German government and industry warn that a strike would cripple services from public transport and trash collection to schools and public swimming pools, and serve another blow to already weak consumer confidence.

The German economy is teetering on the edge of recession, expected to grow less than 1 percent this year. Higher wages for civil servants in times of empty state coffers could force federal, state, and local governments to cut spending and slash jobs.

Rolf Solveen, a senior economist at Commerzbank AG in Frankfurt, however, does not expect a strike would have a lasting impact on the economy.

"A strike would certainly affect us all and be very inconvenient if buses aren't running and services are hit," he says. "It's not the same as a strike in manufacturing. But it will result in further job cuts in public service and accelerate public spending cuts."

Government officials have taken an unusually rigid stance in this year's wage talks with the public sector union.

Some cities threatened to withdraw from national collective bargaining system and instead seek individual local wage deals. Under the German wage system, a deal is struck at the national level and applied to local wages.

Wolfgang Tiefensee, lord mayor of the eastern city of Leipzig and a Social Democrat, warns that even a 1 percent increase in civil-servant pay would force the city to cut another 60 jobs on top of the 180 job cuts already planned this year.

"We've reached the end of what is possible," he says.