Strike in Eastern Germany Reveals Gap With West


THE strike among east Germany's metal, engineering, and steel workers is about much more than the demand for higher wages. It mirrors the debate that sprang from German reunification: Are east Germans second-class citizens economically compared with west Germans?

The strike raises the question as to whether east Germany can attract investors if wages there are much higher than elsewhere in Eastern Europe.

Workers began their strike last week, the first in over 60 years, to force the reinstatement of a contract bringing their wages up to parity with west German wages by 1994. The agreement, signed two years ago, called for wage increases of over 20 percent as of April 1 of this year. But employers reneged on the contract, saying the agreement had become unfeasible due to recession and other economic factors.

They instead offered pay increases of 9 percent this year, on par with the current east German rate of inflation. East Germans in these industries earn about 60 to 70 percent of what west Germans earn, though their productivity lags by as much as 70 percent.

Franz Steinkuhler, president of IG Metall, the powerful engineering union that organized the strike, argues that the east should not become a "cheap-wage colony" of the west. Workers east of the Elbe River deserve the same treatment as those in the west, he says.

But West German union members haven't shown a great deal of support for their colleagues in the east. Yesterday, as a sign of "solidarity" with their eastern colleagues, west German workers staged brief demonstrations - mostly during their lunch break. So far, they have not been willing to make any greater sacrifice to help their poorer cousins.

West Germans have something to gain at the moment from the demise of industry in the east. Recession is hitting western steel plants and shipyards, leading to job losses. The less competitive their eastern counterparts become, the better for westerners in the short run. "Every wage increase in east Germany protects a job in west Germany," says Klaus-Werner Schatz, economist at the Institute for the World Economy in Kiel. Mr. Schatz says that by striking for 20-percent-plus wage increases, east Germans "a re striking their own jobs away."

Even though metal, engineering, and steel workers in the east German states of Thuringia, Saxony-Anhalt, and Berlin-Brandenburg voted this week to join the rest of east Germany in the strike, ambivalence among the strikers is coming across in the media.

They appear unsure as to why they are striking: whether to reinstate the contract, protest against unemployment, or to make sure they receive higher unemployment benefits if they lose their jobs. They are also aware that the higher their wages, the less attractive their region becomes for investors.

Mostly due to the recession, several big-name German firms have canceled investment plans in the region. These include Audi, Mercedes-Benz, Krupp steel, and Holtzmann. But Commerzbank economist Pieter Pietsch says "there is so far no broad" investment pullout from east Germany.

Negotiations between industry and labor are scheduled to restart today, and IG Metall is hinting that it can accept a delay in parity if this year's expected wage increases are reinstated.

The only alternative for east Germany now is to "become a high-technology, capital-intensive economy," Lothar Spath, chief executive of the Jenoptik laser-electronics firm in east Germany, told the Financial Times.

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