German public sector pay dispute:

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German public sector pay dispute: Workers need a new political perspective
Statement of the Partei für Soziale Gleichheit (Socialist Equality Party, Germany)
5 April 2008
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On Monday, March 31, the new contract for over two million German public sector workers employed by federal and local government was announced. Its main purpose is to prevent the pay struggle in the public and private sectors from developing into a broader movement against the government, which could challenge the policy of redistributing wealth from those at the bottom of society to those at the top.

Set against the loss in real wages that public sector workers have had to accept in recent years, the new contract is little more than a drop in the ocean. The trade union Verdi has promoted it as a great success, but that is a sham.

The contract includes a rise in basic rates of around €50 plus a 3.1 percent increase this year. According to Verdi, this equates to a 5.1 percent average rise. Verdi has dropped the original demand for an increase of €200 in basic rates, which would have improved wages considerably for low-income earners. In the coming year, there will be a one-off payment of €225 and a further 2.8 percent rise. To a large extent, however, this will be balanced out by extending working hours in the West German municipalities from 38.5 to 39 hours a week.

In the course of two years, average incomes will thus rise by just over 5 percent. At best, this would barely keep pace with a rapidly rising inflation rate, but it in no way compensates for the pay freeze of the last three-and-a-half years, let alone the cutbacks of the past one-and-a-half decades, which have eradicated a third of the jobs in the public sector.


A wages stitch-up

The public sector employers have been clear for a long time that they would not make any concessions to their workforce this year as far as wages were concerned. In view of rising growth rates, growing potential tax sources, high company profits and the exorbitant salaries of top managers, the pent-up anger of public sector workers—who have had to accept a pay freeze or pay cuts for many years—was simply too great. Verdi, the union that had negotiated this pay freeze, has been losing members hand over fist.

Even some conservative economists have warned that the widening gulf between economic growth and purchasing power would lead to problems of domestic demand in Germany’s strongly export-dependent economy. And the extremely low public sector salaries mean that municipalities with high living costs, like the city of Munich, now have trouble finding teachers, police officers or postal workers.

The public sector employers thus saw as their main task not the enforcing of a further pay freeze, but making sure that workers’ combativeness was dissipated and that the settlement remained relatively modest; something which they have largely achieved. The new contract will cost the municipalities €9.5 billion annually. This is less than the €10 billion that the federal government has thrown into the maw of the corporations through lowering corporation tax from 25 to 15 percent last year.

The Süddeutsche Zeitung commented on what the employers have described as a “painful compromiseâ€