Ailing German capitalism slashes workers’ wages and conditions

WHEN THE Socialist Party’s general secretary Peter Taaffe visited
Berlin last month to speak at the very successful Socialism Days
meeting, he found a marked difference – evident in the conditions of
the city’s poor in particular – from the situation when he last
visited a few years ago. PETER TAAFFE writes:

PERSONAL IMPRESSIONS are not always an accurate guide,
particularly from a short visit, but my observations are backed by a
wealth of evidence and statistics – provided by the public sector and
services union Ver.di – showing the scale of Berlin’s economic and
social decay.

These figures are, in turn, a metaphor for German capitalism as a
whole. In this, Europe’s economic powerhouse, 20% of the population
are poor – having a monthly income of less than €940 (£650). 18
million people in Germany have a disposable income of under €50 a
month when the fixed costs for rent, food, social security etc., are

The polarisation between rich and poor is the same as throughout
Europe. Germany’s ten richest individuals own wealth equivalent to
$100 billion but the working class has experienced a shocking and
dramatic loss in the share-out of the wealth created by their labour.

Wages as a proportion of total national income dropped from 72.2%
in 2000 to 67% in 2005. This is the same percentage figure as in
1965. So, in relative terms, German workers’ share of the wealth has
been pushed back 40 years. In absolute terms, many sections of the
working class have gone back much further than that.

Wealth chasm

This chasm between rich and poor, of course, is not unique to
Germany. Britain, through two decades of neo-liberalism, experienced
the same thing. But what stands out in Germany is the speed of the
descent, the consequences of German ‘fast-track’ Thatcherism firstly
under the ‘social democrat’ Schršder and now by the measures of the
Merkel ‘grand coalition’ government of the Social Democratic Party (SPD)
with the Christian Democratic Union/Christian Social Union (CDU/CSU).

Until recently, the conditions of Britain’s working class occupied
first place in warning Europe’s workers’ movement of what can happen
if a determined resistance against Thatcherism, neo-liberalism –
downsizing, privatisation, deregulation, etc. – is not taken up and
the plans defeated.

Britain still remains a neo-liberal ‘scarecrow’ for the European
working class but it is rapidly being overtaken by the plight of the
German working class. Here, in stark facts and figures, is the future
of all Europe and particularly for the poor and the working class if
‘modern’ capitalism on a continental scale prevails with its
programme of savage cuts in the living standards of working class

Neo-liberal policies

AT PRESENT, German exports may soar ahead on world markets,
elbowing aside their capitalist rivals in markets like China. The
bosses’ profitability has risen accordingly. But those who are
responsible for the country’s economic fireworks, at least on world
markets, are rewarded with reductions in wages, the lengthening of
the working day and week, and the undermining of national bargaining

This is highlighted by the outcome of the recent public-sector
strike of civil servants led by Ver.di, the first for 14 years. The
German capitalists, helped by tame trade union leaders, have already
successfully attacked some workers in the private sector. They used
the threat of ‘outsourcing’ and lay-offs to enforce longer hours at
the same wages for their employees. Now they seem to have achieved
the same object with civil servants.

The finance minister of Baden-WŸrttemberg, Gerhard Stratthaus,
gloated on radio: "For the first time in a long time, this
supertanker [German capitalism] that was always steaming towards
shorter working hours has turned in the opposite direction."

These words show the essence of neo-liberal policies, marking a
decisive change from the past. In the period 1950-1975, an era of
economic upswing throughout the capitalist world, the bosses adopted
what Trotsky called the "religion of capitalist progress". Today is
better than yesterday and tomorrow will be even better, etc, they

Capitalist ‘reality’ today, however, prescribes that the working
class must give up even their present conditions and rights, never
mind looking forward to a brighter future, as German social democracy
promised in the past. The post-war boom period was presented as the
‘norm’ for capitalism. This, in turn, reinforced illusions in
reformist ideas that the working class would advance by incremental

However, events have shown – and this will be reinforced in the
next period – that this era was, in fact, exceptional in the history
of capitalism. This present situation of neo-liberal wage cuts,
deregulation and privatisation is, in fact, capitalism’s ‘norm’.

The very term ‘neo-liberalism’ harks back to the pre-1914 period
of a ‘liberal’, unfettered, unrestrained capitalism. While capitalism
went ahead in this period, playing what Karl Marx called a
"relatively progressive" role in developing the productive forces –
science, technique and the organisation of labour – it was based on
nightmarish conditions for huge swathes, if not the majority, of the
working class. In some ways, in this present era of a ‘borderless’
globalised world – at least for capital – the working class confronts
an even more difficult situation than this.

In the pre-First World War era, trade unions and mass parties of
the working class took shape and offered some defence against
capital’s onslaught. The workers’ organisations even used their
power, in some instances, to extract concessions, reforms, from the
bosses, which Marxists and socialists welcomed. Now, tame
pro-capitalist right-wing trade union leaders preside over the
weakening and setbacks for the working class.

Bosses’ offensive

IT IS true that in France, the working class successfully
resisted, heroically, some of the Chirac government’s ‘backdoor’
neo-liberal measures against the young. These measures were only
defeated by mass demonstrations, three million workers coming out on
two occasions in one week, as well as the threat of a repeat of 1968
before de Villepin and Chirac beat a retreat.

Ironically, the very weakness, numerically at least, of the French
trade unions – officially only 8% of the workforce belong to a union
although in practice it is more than that through the social security
system, etc. – ensured that in the short term working-class fury at
this attack could not be fully constrained by the union leaders but
burst out into mass action. This in turn compelled the bosses and the
government to retreat.

To consolidate this kind of victory, however, poses the need for a
political alternative to capitalism – socialism – and a mass party to
fight for this.

The same fury exists amongst German, British, Belgian, Italian,
Spanish and Greek workers against the unprecedented assault on their
living standards and conditions. But now those very organisations,
which over generations they have created, particularly the trade
unions, act as a colossal brake. If this capitalist assault is
accepted, it means not just a standstill for working-class people but
going back to previously unacceptable conditions.

Already, Germany’s union leaders – in the first instance the tops
of Ver.di which represents public sector workers – have agreed to an
extra half an hour to be worked each week for no extra pay for their
members. The working week is to be extended from 381Ú2 hours to 39.

This falls short of the government’s demand for a 40-hour working
week but the capitalists are quite clear that this is just the start
of the offensive on longer hours which they will ruthlessly pursue.

Anticipating further retreats, the International Herald Tribune
gloats: "Ver.di will now find itself whip-sawed between different
[state] governments, and in some cases legally obliged to extend
concessions made in one negotiation to another." It quotes a "public
sector expert": "The differences are not dramatic among the various
settlements but they are going to grow in the future. The trend the
unions wanted to avoid has finally arrived."

The Merkel government will also seek to build on these concessions
to the bosses. It promises legislation allowing companies to
"negotiate a 24-month waiting period during which new employees can
be fired on short notice". This is similar to the law on young
workers which the French workers defeated in their recent actions.

Moreover, this is against the background of contrasting ‘parallel
universes’ in Germany. Seven million out of 26.3 million workers are
low paid – with about half of these working more than 40 hours a week
and two-thirds of them are women.

Meanwhile, 300,000 unemployed people are forced to work at slave
labour rates with a paltry state top-up of €1 per hour, or have their
state benefits cut. In Berlin, 35,000 workers are in this position.
This is a modern version of the ‘Speenhamland’ system existing at the
dawn of industrial capitalism in England. This forced agricultural
labourers to accept very low wages backed up by ‘parish relief’.

What’s more, without a minimum wage in Germany, there is no
theoretical limit as to how low wages can go. The claim that German
workers are the "second most expensive in the world" is completely
outdated. One million workers earn so little from their job that they
get social benefits.

A Berlin gardener, under the collective wage deal struck between
the unions and the employers for his sector, "earns €3.91 an hour,
barely half the British minimum wage of £5.05 (€7.27)," reported the
Financial Times. Also, if the employers are outside a wage deal, as
are shops, hotels, etc, they can "deviate" from wage agreements and
pay even less than what the Berlin gardeners receive.

Oskar Lafontaine, the leader of WASG, the new party launched by
trade unionists and social activists, claims that wages in Britain
have increased by 20% in the past period while German wages have gone
down. Lafontaine exaggerates the level of wage rises in Britain but
he is right about the stagnation and decline of some workers’ incomes
in Germany.

In fact, wages are so low in Germany now that capitalists in other
countries complain that this gives German exports an ‘unfair
competitive advantage’! This is because the ‘wage cost’ element is so

On paper, German workers still have quite a high level of legal
employment protection, but as the Financial Times gleefully comments:
"The market has found a way around the rules." In other words, the
capitalists will stop at nothing in their pursuit of policies aimed
to boost their profits at the working class’ expense.

However, this drive for profitability enmeshes them in a major
endemic contradiction of their system. By cutting the share of the
working class, it also cuts ‘demand’; the working class cannot buy
back the goods it produces. This reinforces stagnant production in
the home market and high unemployment.

Dire situation

But the leaders of the ex-workers’ party, the SPD, originally
proposed many of the policies which Merkel is now pursuing. This,
together with the ineffectiveness of right-wing trade union leaders,
has brought the German workers, potentially Europe’s strongest, to
this dire situation.

They have been abandoned by ‘their’ party, the SPD, which
historically helped to raise them out of the mud of capitalism, and
trade union leaders with pro-market views are impotent against
capitalism’s offensive. This lack of a mass political alternative is
also reflected in recent elections throughout Europe.

This underlines the rejection by the mass of the population in
different countries of the neo-liberal nostrums propounded by the
different capitalist parties. Merkel has no mandate for her policies;
she had a narrow lead over Schršder’s SPD in the elections but both
were ‘losers’ in the sense that both their actual votes and their
percentage share fell.

Moreover, the German elections followed a pattern evident in the
US in 2000 and continued in Italy’s recent elections where those who
voted were divided almost 50-50. Commenting on this Jonathan
Freedland of the guardian now agrees with our analysis made many
times in the socialist since the 1990s that Europe’s population "know
what they are against, but they are yet to gather around a programme
they’re for. The result is a stagnant stalemate, repeatedly reflected
at the ballot box."

Fighting alternative

THIS MAKES developments around the WASG (Die Wahlalternative fŸr
Arbeit und soziale Gerechtigkeit – Election Alternative for Work and
Social Justice) vital both for Germany and Europe. This is a serious
attempt to provide an alternative reference point for German workers
in revolt against the main capitalist parties’ neo-liberal policies.

Unfortunately, however, the party leadership has gone along with
the policies of the Party of Democratic Socialism (PDS), the remnants
of the former Stalinist ruling party in East Germany, who are in
coalition with the SPD in Berlin’s state government and presiding
over cuts in living standards (see the socialist 439 for details).

For workers, socialists and Marxists, the very minimum for any new
formations within the working class must be clear opposition, not
just in words but also in actions, to neo-liberal policies. Without
such a commitment, including a refusal to participate in capitalist
coalitions at national, state or local level, then any new
development will inevitably became just another variation of the old
discredited models and could be strangled at birth.

In this sense, the struggle of the SAV, the German section of the
Committee for a Workers’ International (CWI), is vital, not just for
Germany but for all of Europe. Its determined advocacy of a fighting
socialist alternative for the WASG points the way for the workers’
movement in Germany and Europe at present.

Economic crisis

EUROPE ITSELF is at a crossroads. Capitalist Europe is split and
demoralised after the recent defeats of the European constitution.
However, the capitalists are absolutely determined to pursue their
neo-liberal agenda. In countries like Britain and now Germany the
‘race to the bottom’ has already had a serious effect on wage levels
and conditions at work.

The 300,000 immigrant workers who have come into Britain since
2004 – most of whom came from Eastern Europe after EU enlargement
affected these areas – have been used as a huge reservoir of cheap
labour, which capitalists have used successfully to undermine wages
and conditions.

It has now reached the stage in Britain where Polish workers who
came here three or four years ago now find themselves priced out of
the jobs market by ‘newcomers’ from their own country working on
wages even lower than this.

This has resulted in a bonanza for the rich and a further
polarisation between the poor, particularly the very poor, and the
super-rich. The solution is not to build a new ‘Berlin Wall’ to ‘keep
them out’, as the far right argues, but to organise these workers
into unions to fight for a living wage.

At the same time, Europe’s capitalists are politically split.
Economically, European capitalists as a whole have also given up the
dream of catching up with and outstripping US imperialism. The latter
now contemptuously say that the rulers of the continent are presiding
over a "museum".

The shambles of the European constitution and continuing problems
over the EU’s enlargement show that capitalism cannot completely
overcome the limits of the nation state. The national barriers of the
separate capitalist states reasserted themselves in the form of
economic nationalism by France and others when ‘foreign companies’
attempt to take over ‘strategic’ industries.

The result is a stagnant European economy with mass unemployment
in key countries such as France, Germany, Greece and others. In
Europe’s periphery, the ex-Stalinist states that are clamouring to
get into the EU are a picture of decay and destitution for the
masses. In the hastily constructed ramshackle state of Bosnia, 70% of
the budget of its ‘government’, constructed through a Byzantine
constitution, is used just to pay for its politicians and officials!

Yet Europe is potentially a mighty reservoir for economic
development and for the raising of the living standards of the great
majority of the population and, with it, the elimination of poverty
and want throughout the continent. However, capitalism is incapable
of doing this.

Wealth polarisation, endemic unemployment, environmental
degradation; all this exists in the so-called ‘boom’. What will
happen if the bottom falls out of the economy on a world scale? If
the capitalists now seek to unload the burden of their system’s
problems onto the shoulders of the working class, it will be even
more the case then.

The present travails of the German working class will be common
and become much worse for the continent’s working class on a
capitalist basis. Socialists and Marxists, particularly the new young
forces entering the struggle, are determined this will not come to
pass. The left in the WASG, with SAV to the fore, are in the vanguard
of this battle.

See also: Germany: WASG rebels suspended