Germany: Latest developments in working life Q4 2019

The social–ecological transformation and its impact on sectoral trade unions, along with a proposal by social partners for the government to secure economic sustainability through greater investment are the main topics of interest in this article. This country update reports on the latest developments in working life in Germany in the fourth quarter of 2019.

Unions discuss social-ecological transformation

When the United Services Union (ver.di) and the metalworkers’ union IG Metall staged their conventions in late September and early October 2019, the ‘social-ecological transformation’ ranked high on the agenda. Both trade unions have been involved with the Fridays for Future movement to show their commitment. Ver.di members in the energy sector will be directly affected by the exit from coal and in 2018–2019 the trade union was represented in the past by the multistakeholder Coal Commission which gave its policy recommendations in early 2019. In addition, because the public sector and the transportation sector will have fundamental roles in the transformation to a carbon-neutral economy, ver.di will need to be involved in the transformation process. IG Metall has been preparing for e-mobility for quite some time, with the transformation of the car industry being a long-standing issue within trilateral sectoral dialogue. Because both trade unions see a need for major public investments, they have asked the government to reform the tax legislation and to give up on its focus for ‘black zero’ (a balanced budget) in its fiscal policies.

The ver.di convention at the end of September called for major investments in cogeneration plants and renewable energies in infrastructure, as well as in local and regional transport. Retraining and wages for former energy-plant workers were important topics at the convention. The trade union has stated that higher prices for fossil fuels will affect poor households the most and demands tax-based compensation measures for commuters and for private households.

During its October conference, IG Metall called on the government to revise the short-time working scheme so that it can be used during restructuring processes. Groups of affected workers shall be put in the position to stay employed and to receive part of their wage (paid by the Federal Employment Agency) while being retrained. ^[1] During the convention, IG Metall pledged to take a very strong participatory approach and to involve workers in developing the transformation process.

In November, Chancellor Angela Merkel invited IG Metall and other sectoral social partners to another Car Summit. At the summit, participants agreed that to help promote the e-vehicle-market the government will fund the installation of an extra 50,000 charging stations by 2021 – an idea by IG Metall – and increase the subsidies for the sale of about 700,000 e-vehicles. ^[2] Consumers purchasing a 40,000 Euro car will receive a premium of up to EUR 6,000 Euro; the purchase of a EUR 60,000 Euro car will be supported with a premium of EUR 5,000.

Social partnership alliance for fiscal policy reform

In late 2019 the German Trade Union Confederation (DGB), the Federation of German Industries (BDI), the labour-related Macroeconomic Policy Institute (IMK) and the employer-related German Economic Institute (IW Cologne) jointly proposed to the government should move away from its rule of a balanced budget. ^[3]] The proposal rests on a joint macroeconomic study by IMK and IW Cologne that is also backed by the German Institute for Economic Research (DIW). ^[4] The experts and confederations argue that the strict ‘black zero’ rule impedes public investments urgently needed for making the economy sustainable. According to the experts, €75 billion is needed for decarbonising the economy – under the assumption that industry carries 85% of the cost and the state carries 15%. Including other investment needs (such as education, infrastructure, broadband), they anticipate a need for €45 million per annum for the next 10 years. The proposal stirred a lively political debate. The proposal was rejected by the Confederation of German Employers’ Association (BDA), which stated that the problem is bureaucratic burdens and poor social policy decisions. ^[5] The ruling Christian Democrats also rejected the concept. ^[6] In contrast, the new SPD leaders back the proposal.

Outlook

The process of developing German climate policies is highly controversial. On 12 December, a Climate Action Law was enacted that gives the framework for the measures still to come. The law stipulates that the future climate action programme shall be monitored by an academic expert committee on an annual basis and that measures shall be readjusted in case the set national climate targets are not met. The DGB and the environmental organisations appreciate this mechanism but, for example, the automotive employers criticise the trend towards command and control mechanisms. ^[7]

The year 2020 will be an important one in determining the direction and efficiency of the new climate policy measures. At the time of writing, the promotion of e-vehicles is the best funded measure there is, but their climate-friendliness is questionable.