March 13, 2006

German strikes put Merkel’s coalition under strain

By James Mackenzie

BERLIN (Reuters) - Germany's public sector strikes, now in
their sixth week, are developing into a test of union strength
and have exposed cracks between the parties in Chancellor
Angela Merkel's coalition government.

The dispute over working hours has pitted Germany's biggest
union Verdi against municipal and state government employers in
the biggest public sector stoppage since the early 1990s.

Tens of thousands of cleaners, nurses, office workers and
others have walked out at different times, leaving garbage
uncollected, closing kindergartens and interrupting hospital
services in 12 states.

Verdi, like other unions, has been struggling with falling
membership but is still strongly represented in the public
sector, and the dispute has been seen as a test of its power to
keep a strong role in a centralized bargaining system.

"I don't think it makes sense to describe this as a fight
for survival for Verdi. That's got nothing to do with the
reality of the situation," said Reinhard Bispinck, from the
Economic and Social Research Institute of the Hans Boeckler
Foundation, a think-tank linked to the trade unions.

"But it's a very defensive campaign, no question," he said.

As the strikes have dragged on, the dispute has become a
potentially disruptive force for Merkel's coalition of
conservatives and center-left Social Democrats (SPD),
traditionally close to the unions.

Merkel has been careful to keep out of the dispute but
Hartmut Moellring, conservative finance minister of Lower
Saxony who is leading negotiations for the employers, has taken
a hard line, incurring the wrath of Verdi and leading Social
Democrats by breaking off talks at the weekend.


Kurt Beck, the SPD premier of Rhineland-Palatinate who
faces an election on March 26, threatened at the weekend that
SPD-led states could pull out of TdL, the umbrella group that
represents public sector employers.

Such a move, amid a brewing disagreement over plans to
reform Germany's federal structure, would represent a serious
break in the harmonious coalition climate that has prevailed
since Merkel took office in November.

At first sight, the nub of the dispute -- a demand to
increase working hours from 38.5 hours a week to 40 for no
extra pay -- appears trivial. Employers point out that this
would add only 18 minutes to each working day.

However, it represents an important battle for public
sector workers, who have so far held out against the longer
hours now common in the private sector.

Bispinck said the increase could be seen as a 10-day cut in
annual holidays and pointed out that employers would reap
substantial savings if workers gave in to their demands.

Germany's cash-strapped local governments, most struggling
with ballooning budget deficits, say the longer hours are
needed to help cut costs and get their finances in order.

Verdi says the plan would put an unfair burden on low-paid
workers and would destroy up to 250,000 part-time jobs, a
figure disputed by many economists.

The union has made offers similar to a widely criticized
deal reached in the northern city of Hamburg, in which better
paid workers work longer hours, but these have been turned down
by employers, opening the prospect of drawn-out struggle.

"It's really about symbolism. The real point is whether
they are forced to capitulate on this very symbolic point,"
said Deutsche Bank economist Stefan Schneider.