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Opinion: Build a new union-led counterbalance

Dr. Dierk Hirschel, Verdi
Dierk Hirschel
May 1, 2018

In Germany on May 1, only a few people actually go out on the streets to demand better working conditions. Even so, there is a lot to improve, according to guest commentator Dierk Hirschel.

Verdi union members protest at Frankfurt Airport
Image: Reuters/K. Pfaffenbach

May Day is the day of working people. More than 125 years ago, hundreds of thousands of people marched in Berlin, Hamburg and Dresden, campaigning for the introduction of an 8-hour work day. A lot has changed since then. However, some key challenges and areas of conflict remain the same.

In a capitalist society, in the past as well as today, fairness is decided by the strength of the labor market.

Read more: German trade unions strictly against basic universal income concept

This is about power and counterbalance. The labor market is not like a vegetable market, where the price — i.e. the wage — is determined solely by supply and demand. Earnings and working conditions depend on the negotiating power of the employees. Often workers and their employers — who, let's face it, often hold more power — can't always agree the former's worth. Strong trade unions and an effective welfare state can correct this imbalance.

Dierk Hirschel, chief economist for the Verdi union (Verdi)
Dierk Hirschel is chief economist for the Verdi unionImage: Verdi

Low rate of union membership

If employees organize themselves well, it is still possible today to significantly improve their wages and working conditions. IG Metall and Verdi have impressively demonstrated this with their latest pay agreements in the metals and electronics industry as well as the public sector. In recent decades, however, trade unions have come under increasing pressure.

Today, not even one in five employees is part of an organized union. Verdi, IG Metall and others negotiate on behalf of just three out of five workers. The system of collective labor agreements is being eroded. The consequences are low wages, longer working hours and increasing income disparities.

Read more: German labor unions and government reach pay increase deal after countrywide strikes

Workforces blackmailed

Politics is largely to blame for the weakening of trade union bargaining power. The deregulation of the labor market and the restructuring of the social security system flooded Germany with cheap and insecure jobs. The threat of the Hartz IV poverty trap — a system of reduced welfare payments introduced in 2005 — made it possible to blackmail the workforce. This reduction in social security undermined the collective labor agreements and invalidated the trade unions. This has little to do with open borders or digital change. Politics made the difference.

Symbolbild | Start Up, Office, Meeting
Hirschel wants digital workers to organize to ensure that newer industries can enjoy the same conditions as other sectorsImage: picture-alliance/dpa/ZB/B. Pedersen

Political demands

Germany's new coalition government could turn back the balance of power in favor of workers. To achieve this, Chancellor Angela Merkel and Finance Minister Olaf Scholz would first have to politically strengthen the system of collective bargaining. Existing agreements should remain in force until a new settlement can be agreed. It should also be easier to make labor agreements universally binding.

Read more: Unemployed in Germany have greatest risk of poverty in the EU

More regular, fixed employment should also be encouraged, along with equal pay for equal work. Companies should rely less on precarious types of work. The minimum wage should be raised to over €10 ($12) an hour. The Hartz IV welfare laws must be reformed to reduce the obligation to work. Social and caring professions also need to be upgraded. Furthermore, digital work finally needs to be upgraded to include the same standards of employee benefits enjoyed by other sectors.

Whether this succeeds is a question of political will. Of course, this does not exempt trade unions from their obligations. IG Metall, Verdi and others must open up non-union areas and better organize the edges of the labor market in order to increase their organizational strength — for good work, social security and a fairer society.