Holtzmann deal as union bending?

Michael Pollak mpollak at panix.com
Tue Dec 28 19:17:30 PST 1999


THE FINANCIAL TIMES, Letters to the Editor

Tuesday, December 28th, 1999


>From Mr. Adolf Rosenstock--

Sir, Is Gerhard Schroeder, the German Chancellor, the savior of Germany Inc or the bogeyman who dissuades international investors and can be blamed for the euro's weakness? What might the Holzmann rescue be remembered for?

Just when leftwingers were preparing for an assault at the party congress and unions were wondering whether they had helped the wrong kind of government into office, Holzmann provided a golden opportunity for the chancellor to turn the tide. He could portray himself as the savior of 60,000 construction workers' jobs because he dared to knock big bankers' heads and make them accept their social responsibilities.

It was a seemingly great day for old social-democratic values and the unions. He was handsomely rewarded with standing ovations and confirmation as party chairman with a vote of 86.3 per cent. Only with such backing could he dare to announce bold plans for more tax cuts.

Holzmann's workers' council has agreed to a 6 per cent wage cut and up to 17 hours unpaid monthly overtime for 18 months. Valued at DM 245m, this concession is a blatant breach of the sector's collective wage contract to which Holzmann is a party. The country's most inflexible and best-guarded collective wage cartel has been busted by workers and management of the second biggest German construction company in distress.

In the past unions and employers alike have done their best to keep the cartel as tight as possible. When large numbers of foreign workers from eastern Europe came into the country to work for much less than unionised German workers, the union enrolled full government support. The late Kohl government introduced minimum wages in order to fend off the pressure.


>From now on, companies in similar situations will seek to achieve the same
flexibility. Unions would lose credibility and their members' support if they were to block such attempts by lawsuits as they have done in the past. If the construction workers' union and the sector's employers' associations remain as intransigent as before, the whole cartel could soon fall apart. I think the Holzmann operation has done more to undo Germany Inc than any other corporate event since unification.

Adolf Rosenstock European Economic Research, Nomura International, 1 St Martin's-le-Grand, London EC1A 4NP, UK

__________________________________________________________________________ Michael Pollak................New York City..............mpollak at panix.com



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