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Merkel Proposes Curbing Union Power as Strikes Cripple Germany

Thursday, 30 Oct 2014 06:30 AM

Oct. 30 (Bloomberg) -- German Chancellor Angela Merkel is proposing curbs to union power following walkouts in recent months that have crippled the country’s transport network.

Strikes this year by Deutsche Lufthansa AG pilots have led to the cancellation of 5,800 flights, while a series of walkouts by Deutsche Bahn AG engineers have brought trains to a standstill. Now, Merkel’s government, in a proposal released this week, is pushing to limit the role of smaller labor groups in wage negotiations.

“We are observing a tendency for strikes by small unions with big consequences that result in many, many people suffering,” Merkel told reporters. “We’ve made the decision” to change the law to limit collective-bargaining power to one party per business, she said.

Even before this year’s strikes, which include walkouts by Amazon.com Inc. workers, labor unrest in the country has been rising. The number of companies hit by industrial action soared in 2013 to 1,384, the highest in two decades, according to data published by the Federal Labor Agency. While unions say they’re pushing for pay gains to make up for stagnating household incomes, companies argue they can’t afford higher wages as Europe’s biggest economy flirts with recession.

The strikes are “not helpful given the economic weakness,” said Thomas Harjes, senior European economist at Barclays Plc in Frankfurt. Germany is “at a crossroads,” and the right to strike must be exercised with proportionality and fairness, he said.

Limiting Involvement

The bill -- drafted by Labor Minister Andrea Nahles, a Social Democrat and IG Metall union member -- wouldn’t directly curtail strikes as such. Instead, her proposal would limit future wage talks to the biggest union for each group of employees, potentially curbing the role of smaller organizations. The plan would also give courts more power to intervene in labor disputes.

“This is an intervention against the right to strike and as such is unconstitutional,” Vereinigung Cockpit, which represents Lufthansa pilots, said this week of the proposed law. This is about “breaking the power of smaller unions.”

Smaller labor groups have increased their influence in recent years following a 2010 court ruling allowing them to negotiate outside the industrywide agreements that have characterized Germany’s wage deals.

The GDL union, which is threatening more walkouts at the national railway, is locked in a battle with competitor EVG to negotiate for train drivers. Both claim to be their main representative.

Abusing Rights

The GDL is abusing strike rights by putting “its own interests above the interests of all working staff at the railway,” said Kerstin Griese, a Social Democrat and chairwoman of parliament’s labor committee. The GDL “is not striking for pay but competing for power with a rival union.”

The Ver.di service union -- which has staged a series of walkouts at Amazon’s distribution centers, including one this week, to push for higher wages and a collective bargaining agreement -- has also come out against the proposal saying that it “indirectly restricts” a union’s right to strike.

The number of German workers participating in walkouts in 2013 stood at the highest in five years, while working days lost were the most in six years, according to Federal Labor Agency data. Unions argue raises are necessary because wages have been flat. Adjusted for inflation, household income has not risen between 2006 and 2012, according to the Hans-Boeckler- Foundation, a labor-affiliated organization.

Lufthansa calls the government’s proposed changes a first step in the right direction. The airline has been hit with a number of disruptions in the past three years, including from strikes by air traffic controllers, security staff, fire fighters, apron staff and baggage handlers.

“Strike law wasn’t made for small unions pushing their negotiation potential to the limit,” Harjes said. Train drivers and pilots, who are already better off than colleagues working for the same company, should be able to negotiate their demands “fairly, but not on the back of the public at large.”

--With assistance from Jana Randow in Frankfurt.

To contact the reporters on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net; Birgit Jennen in Berlin at bjennen1@bloomberg.net; Brian Parkin in Berlin at bparkin@bloomberg.net To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net; Benedikt Kammel at bkammel@bloomberg.net Jana Randow

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2014-30-30
Thursday, 30 Oct 2014 06:30 AM
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