It is clear that the debacle was due to the top officialdom’s course of disregarding the terrible economic situation in the east, where unemployment is 18 percent and many workers are justifiably apprehensive about the possibility of further job losses.

More than 300,000 workers in Saxony and Berlin initially took to the picket lines. A month later, the strike affected Germany’s auto factories. Many had to close down for lack of parts and 10,000 workers were laid off. This led thousands of strikers to cross picket lines and return to work afraid of losing their jobs.

As picket lines crumbled, the IG Metall officialdom called off the strike. “The bitter truth is that the strike has failed,” said Klaus Zwickel, the union’s chairman. “There is no doubt IG Metall miscalculated,” Claus Eilrich, another union spokesman, told German television. “We misjudged the political situation and we estimated that the economic situation in Germany was more positive.”

IG Metall is one of Germany’s biggest unions with 2.7 million members. Earlier this year it won a wage settlement of 4 percent after a strike. The effects of the defeat in the eastern strike may be profound in Germany.

Klaus Zwickel was due to resign his post at the union’s next constitutional congress. He will now leave earlier. A special IG Metall congress has been called for late August to elect a new chairperson. There is now a public fight on who is responsible for the defeat in the strike. Hundreds of workers have resigned from the union as a result. This comes on top of IG Metall losing 1 million members over the last 10 years due to factory shutdowns.  
 
A turning point for labor?
But more important is the discussion about the place of the union movement in Germany, especially in the east, and its weight for the future of labor’s battalions. “This could be a turning point for the labor movement in Germany,” said Klaus Zimmerman, president of the German Institute for Economic Research. “I don’t think it’s the end of collective bargaining, but it will definitely change the face of the labor movement.”

René Vits, union council chairman of auto-part supplier Federal Mogul, based in Dresden¸ said the following about the outcome of the strike to Berliner Zeitung. “This defeat will weaken unions for many years to come. It will lead to a clear isolation of the east. What should smaller, weaker unions do, when even IG Metall can’t push through anything?”

The strike took place as the German economy continues in a recession that began at the end of the 1990s. No upturn is in sight. Growth of the gross domestic product for this year is expected to be a mere 0.75 percent or even less. Production of consumer goods is down 2 percent. Production of new cars has declined 20 percent. Unemployment nationally is 10.6 percent.

Thirteen years after reunification the eastern part of the country still lags behind. Joblessness is almost double that of the west. The workweek is 38 hours, compared to 35 in the rest of the country for the same pay. Capitalists maintain that this is necessary to attract investment because of lower productivity levels in the east. Only about 30 percent of the workforce is under collective bargaining contracts.

The cost of reunification is one reason for the bleak situation. Over the past 13 years the government has poured $700 billion into the east mostly for unemployment benefits and other social programs in order to avoid a social explosion over the disparities between the two parts of the country. This has not boosted the German economy, but instead become a heavy burden.

Germany’s poor performance from its position as the leading economy in the European Union leads to continent-wide effects.  
 
Effects of strike across Europe
“The budget deficits of France and Germany, the two largest countries in the 12-nation euro zone, are expected to exceed 3 percent of gross domestic product this year and possibly next year, too,” said an article in the July 25 U.S. big-business daily Wall Street Journal. “If that happens, it would mean that for the third year in a row Paris and Berlin will have violated the terms of the so-called Stability and Growth Pact, which requires euro-zone countries to bring deficits into—or close to—balance within a few years, and threatens massive fines for noncompliance.

“France and Germany have argued that those rules shouldn’t be strictly enforced so they can stimulate growth.” These are the two governments that initially pushed the hardest to impose this pact on other EU countries. The Journal pointed out that the euro zone countries—with a combined population larger than the United States and a GDP exceeding that of Japan’s, the world’s second largest national economy—are in the third year of an economic slump, with an average GDP growth expected to reach only 0.6 percent this year.

“The problems are not unique to Germany; you find them all over Europe,” said Michael Fichter, executive director of the Center for Labor Studies at the Free University in Berlin. As Europe’s markets become more open, he said, unions are being viewed as an obstacle to competitiveness.

All governments in Europe, regardless of political combinations, aim at cutting the social wage amidst conditions of economic depression. In Germany the social security system is still virtually untouched. In March, Chancellor Gerhard Schröder presented a program, dubbed Agenda 2010, to “reform” the welfare system. His social-democratic government struck a deal with the opposition Christian Democrats for cuts in the health-care system. Citizens will now have to pay for medicine and for visiting doctors. Next along this course are similar agreements on pensions and labor laws.

“Cuts—at last!” was the headline of the main editorial in the July 23 issue of the Swedish conservative daily Svenska Dagbladet. An article in the July 10 issue of the paper had discussed the situation facing the union movement in a number of European Union countries in the aftermath of the defeat of IG Metall.

It pointed to unions in Italy not being able to stop the government’s new labor laws and said the union movement in France is on the defensive with no more than 2 million members nationally.

“Gerhard Schröder in Germany, Raffarin in France and Berlusconi in Italy have a golden opportunity to increase the reform pace in Europe,” the article said. “Primarily they have to deal with the crisis in the pension systems, health care and public spending—in other words the big structural issues that no politician dared touch as long as there was a strong organized opposition among the employees.”  
 
 
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