Union strikes jolt Germany

Sitting at a silent construction site, where, until last Thursday, builders were transforming Munich's old convention center into apartment buildings and shopping centers, Mr. Lihl complains that construction workers like him, from western Germany, are being driven out of the industry.

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"There are companies who fire their own workers to hire cheaper foreign workers," he says. "And the politicians sit around and do nothing. It doesn't matter how long the strike takes. Four or five weeks – it doesn't matter to me."

With the Sept. 22 election approaching, the expanding strike, currently involving almost 21,000 workers at more than 1,500 building sites across the country, comes at an awkward time for Germany's Chancellor Gerhard Schröder. Polls already show that voters see his opponent, Bavaria's president Edmund Stoiber, more capable of solving Germany's economic woes.

In a study conducted earlier this month by the Election Research Center in Berlin, 32 percent of those polled believed Stoiber can better solve Germany's economic problems, while only 15 percent thought Schröder could.

The latest strike by the IG Bau union is now the third in a series this spring, following IG Metall's metal workers' strike in early May, and an ongoing strike by the services union Ver.di in the banking sector. Some 6,000 employees who are members of the Ver.di union walked off the job last week.

After his unsuccessful efforts to ward off IG Metall's strike, Schröder has so far remained silent on the recent labor unrest.

The cumulative nature of these strikes, say analysts, could take a toll on Schröder's reelection chances and damage the German economy's nascent recovery.

"There are a lot of people in the union who are disappointed in the red-green coalition," says Michael Fichter, political science professor at the Free University in Berlin, referring to Germany's current governing partnership, made up of Schröder's Social Democrats and the Green Party. "But given the alternative, they would rather have Schröder. Nevertheless, if this strike continues for a long time, it will really hurt Schröder. And this strike could go on for a while."

The strike by the 350,000-member IG Bau union, the first in the German construction industry since World War II, began last Monday with work stoppages in northern German cities such as Hamburg and Berlin following the breakdown in this year's round of wage negotiations early this month. So far, aside from a few scuffles in Hamburg and Munich, the strike has proceeded peacefully, although workers fear that the chances for violence will grow next week as nonunion workers try to continue work at construction sites. "I am afraid because of the strike," says one Croatian union member who asked not to be identified.

IG Bau is asking for a 4.5 percent rise in wages, reflecting IG Metall's demands earlier in the year. They also want a single minimum wage for all construction workers in Germany and more money for worker training. They are targeting building sites with tight timetables in an effort to force the industry to give in.

The National Building Industry Association considers the demands to be irresponsible. They are offering 3.1 percent and say that's more than they can afford.

The current state of Germany's building industry appears to support their claim. Following a postreunification boom in the mid-1990s fed largely by the rebuilding of former East Germany, the building sector has endured a long downward spiral. Since 1995, more than 500,000 German construction workers have lost their jobs, with 100,000 of those losses coming this year. And, say economists, there are still too many companies for too few construction projects.

"Building companies are working under very tight deadlines and with very small profit margins," says Hagen Lesch of the Institute for Economic Research in Cologne. "They just don't have the reserves to fill the hole made by the strikers. The strike will likely lead to more job losses. I think the workers are digging their own graves."

IG Bau union chief Klaus Wiesehügel, however, insists that they are trying to save jobs and points to the union's secondary demand for an equal minimum wage for workers from eastern and western Germany. Currently, western German workers can count on a minimum wage of $9.41 while eastern workers receive $8.28, a difference negotiated between the union and the construction companies following German reunification in an effort to help the eastern economy become competitive. Now, however, says Mr. Wiesehügel, with the downturn in the building industry, western workers are being forced out by the cheaper eastern labor. In addition, companies are hiring workers from countries in Eastern Europe, such as neighboring Poland or Romania – workers who are willing to work for as little as $4.85 per hour or less.

"We want to raise these wages in the East, but the eastern companies refuse," says Gunther Busch, Bavarian regional secretary for IG Bau. "There is a wage dumping that results, and our workers can't compete. Pretty soon, there will be no more Munich workers on Munich construction sites. Only people from who knows where."

Ironically, it is Schröder's earlier cozy relationship with Germany's unions that is, in large part, creating the current labor strife. During the 1998 election, Germany's unions supported Schröder with a campaign effort that was instrumental in his election victory. Unions then complied with his request to keep wage demands modest in order to promote reinvestment and create more jobs. For the most part, unions complied. Until this year.

"Unions are saying that this strategy has not brought new jobs," says Mr. Fichter. "Union demands have been modified for the last three years, and real wages have gone down. Now they are demanding higher pay increases."

Stoiber has so far failed to use the strike to his advantage. Despite labor's dissatisfaction with the left, workers still consider Schröder the better choice.

Following the lead of conservative governments across Europe, Stoiber prefers drawing attention to immigration. At his party's convention in mid-June, he indicated that the issue, along with the economy, was going to be a major focus of his campaign.