Forced labour compensation scheme faces difficulties

In July 2000, the German parliament passed legislation to provide compensation for 1 million surviving victims of slave and forced labour during the Nazi period, through a Remembrance, Responsibility and Future Foundation. The law followed lengthy negotiations between the governments of the USA, Germany and several eastern European countries, along with representatives of German business and of slave/forced labourers. In early 2001, German companies are facing severe problems in trying to raise their share of the fund's total assets of DEM 10 billion. German business is still DEM 1.4 billion short of the DEM 5 billion promised in the negotiations, and politicians and trade union representatives are beginning to lose patience with those companies - notably medium-sized firms - which are unwilling to pay. Meanwhile, the German parliament will not release the funds before German companies have been assured protection from further litigation, especially in US courts.

In July 2000, the German parliament passed legislation to provide compensation for those involved in slave and forced labour during the Nazi period. As the result of lengthy negotiations between the governments of the USA, Germany and several eastern European countries, along with representatives of German business and of slave/forced labourers, the Bundestag passed a law setting up the Remembrance, Responsibility and Future Foundation (Stiftung Erinnerung, Verantwortung und Zukunft) to provide payments to the 1 million or so surviving victims.

In early 2001, more than six months after negotiators reached the final compromise on compensation, companies are facing severe difficulties in raising their share of the new compensation fund. Government and industry have promised to provide DEM 5 billion each to the fund, but firms have put up only about DEM 3.6 billion so far. Wolfgang Gibowski, spokesperson for the German Industry Foundation Initiative (Stiftungsinitiative der deutschen Wirtschaft), through which business contributions are channelled, criticises medium-sized companies, in particular, for not joining the Foundation and paying their share. Although by 10 January 2001 some 5,400 companies had already joined the Industry Foundation, the majority of medium-sized firms had yet to do so.

Public pressure on the German business community to provide its full contribution to the compensation fund has increased, and the tone of the debate is becoming harsher. In a recent radio interview, Mr Gibowski accused those companies which have still not joined the Foundation of lacking historic responsibility and moral commitment. This new strategy contrasts with the Foundation's earlier policy which was based on a "voluntary campaign of solidarity" and refused to identify the companies which had not paid.

While German business is still struggling to raise the money, the government and the Industry Foundation alike are awaiting a forthcoming ruling by a US District Court on the settlement of class action lawsuits concerning slave and forced labour (see below). Both elements, financial compensation and achieving "legal peace" are at the centre of the law which the Bundestag passed in July 2000 as the result of an agreement between the German government and business representatives on the one side, and representatives of slave and forced labourers, and east European and the US governments, on the other.

Law on compensating slave and forced labour

The July 2000 Law on the Creation of a "Remembrance, Responsibility and Future Foundation" (Gesetz zur Errichtung einer Stiftung "Erinnerung, Verantwortung und Zukunft") serves a dual purpose. First, it creates a foundation to make financial compensation available through "partner organisations" to former forced labourers and to those affected by other injustices committed during the National Socialist period. Under this section, two different categories of workers are covered: slave labourers used by the Nazis in concentration camps as another means of execution, expecting the victims to die as a result of the lethal work conditions; and forced labourers who were brought to Germany from eastern Europe to keep German industry running during the Second World War and replace workers sent to the front. More than 1 million former labourers are expected to be eligible for payments, mostly central and eastern Europeans. As shown in the table below, section 9 of the law provides for a pre-defined scheme for the distribution of funds. While in most eastern European countries compensation payments are provided through government agencies, Jewish slave workers in particular are being compensated through partner organisations.

Distribution of funds to compensate slave and forced labourers
Country/partner organisation Compensation (DEM billion)
Republic of Poland 1.812
Ukraine 1.724
Russia n Federation 0.835
Republic of Belarus 0.694
Czech Republic 0.423
Rest of eastern Europe and rest of the world 0.800
Conference on Jewish Material Claims against Germany 1.812

Source: Annex B to the joint statement issued on the occasion of the final plenary meeting, concluding international talks on the preparation of the Federal"Remembrance, Responsibility and the Future Foundation."

Additional payments will provide compensation for various banking and property claims and in addition cover administrative costs and legal fees.

Second, the law sets up a separate Remembrance and Future Fund which will support projects in the following areas:

  • fostering better understanding among peoples;
  • serving the interests of survivors of the Nazi regime;
  • youth exchanges;
  • social justice;
  • remembrance of the threat posed by totalitarian systems and despotism; and
  • international cooperation in humanitarian endeavours.

The fund, with total assets of DEM 10 billion, is to be financed 50-50 by German industry and government. While the government's portion is to be paid by the Federal Ministry of Finance, German industry seeks to raise its share through the German Industry Foundation Initiative.

Legal protection

In exchange for compensation payments, German companies hope to receive protection from litigation by former slave/forced labourers. While on an individual basis every beneficiary is to sign a waiver form which excludes any further legal recourse, section 17 of the law also provides that funding will be granted only when adequate legal protection for German enterprises is guaranteed. It remains at the discretion of the German parliament to make a statement as to whether legal peace has been achieved and the funds should thus be released. While legal cases which were brought in the German courts were soon dismissed, German business is still concerned about pending litigation in the USA. In particular class-action lawsuits occasionally end with multi-million dollar awards, a risk which most German firms are unwilling to take. Thus, the German negotiators insisted on some form of legal protection as a condition for compensation payments. While the US government found itself unable to mandate US courts to drop the pending cases, it agreed to issue a "statement of interest" which informs the courts that it is in the government's interest not to pursue any further litigation.

In the months following the passing of the law, all but one of the US legal cases were dismissed, but the final class-action lawsuit pending in a federal court is causing a headache to representatives of the German Industry Foundation. In a court hearing on 29 January 2001, Federal Judge Shirley Kram refused to dismiss a class-action lawsuit brought by victims of the Nazis against several German banks and ordered the defendants first to issue a statement regarding seven critical questions raised by the court. Among other points, Judge Kram seeks more detailed information about the procedure for the payments and also wants to know about the missing DEM 1.4 billion yet to be raised by the German Industry Foundation Initiative. A further hearing was scheduled for 28 February 2001. This unsolved problem puts the Industry Foundation in a precarious situation. On the one hand, it desperately needs legal protection to reassure German companies and make them pay their dues; on the other hand, it can hardly force the US court to drop the final case before providing proof that German business is capable of paying the full amount. Probably the most dramatic consequence of this stalemate will be that as long as the Bundestag does not vote to declare a state of "legal peace" and thus release the funds, payments to slave and forced labourers will be further delayed.

Public responses

In a recent public statement, Chancellor Gerhard Schröder emphasised that he feels optimistic about the Foundation's prospects of succeeding in its fund-raising mission, but other high-ranking representatives do not share this optimism. In a letter to some 1,000 medium-sized companies, Federal President Johannes Rau demanded that they provide some credible signal to show that the suffering of slave and forced labourers has not been forgotten. He emphasised that joining the Foundation is a sign of historical responsibility. President Rau further stated that none of Germany's neighbours or friends in the world would be able to understand the "disgraceful haggling" over a company's contributions to the funds. In an earlier press statement, Klaus Zwickel, the national president of the IG Metall metalworkers' trade union, had bitterly complained about the reluctance of companies to contribute as little as 0.2% of their annual revenue to the fund and announced that his union would start a campaign to publish the names of the defaulting companies in its membership magazine.


When the first step towards establishing the Remembrance, Responsibility and the Future Foundation was made at a public signing ceremony in summer 2000 it seemed to be clear to everybody present that the moment had a much larger significance than just signing a business document. Leading representatives of German business emphasised that legal peace did not reduce historic responsibility. Now, some six months later it arguably seems that responsibility and moral commitment is an issue only for large companies but not for those medium-sized firms which are often considered to be the backbone of the German economy. While large companies have something to lose if their valued images and brand names are associated with exploitation and murder in Germany's past, medium-sized businesses seem to critics to be interested solely in legal protection. There seem to be only three ways out of this dilemma: raising the costs for dissenters by threatening to make their names public; enforcing a law ordering them to pay; or making the group of large companies pay more. It remains to be seen which of those options will prevail. (Martin Behrens, Institute for Economic and Social Research, WSI)

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