How New Germany Affects U.S.

A reunified Germany is facing the formidable task of absorbing millions of inefficient, underemployed and unemployed East Germans and rebuilding the tattered economy of the East.

We may wish our former enemy well, but West Germany’s present economic power, augmented by a revitalized East Germany, along with the power of our other former foe, Japan, will mean more trouble for American workers on the industrial battlefronts of the world.

It seems certain that the Germans will succeed in time, but, probably fortunately for us, it won’t be easy for East and West Germany to meld their disparate systems.

Hundreds of thousands of skilled workers and professionals have already moved from East to West Germany looking for well-paying jobs. Migration of many more skilled and unskilled workers is expected to continue until companies on both sides of that once tightly closed border can offer workers more comparable jobs.

Germans on both sides of the old Berlin Wall will pay heavily for unification.

Workers in West Germany are worried about rising unemployment and pay levels jeopardized by competition from the massive influx of job-hungry workers pouring in from the East.

Workers in East Germany face massive unemployment--up to 50%. Some experts in Germany estimate that nearly half of all East German companies may be forced into bankruptcy, or close to it, if their substantial government subsidies are cut off as planned.

The troubles for East German workers stem from, among other things, their low productivity and from the fact that the workers in the East aren’t buying nearly as many of their own goods now that products from the West are available.

West Germany’s central bank, the Bundesbank, estimates that East Germany’s worker productivity is only 40% of West Germany’s. To reduce that difference, a complete overhaul must be made of most East German plants and equipment, and the skills and morale of workers in those plants must be dramatically improved.

Total compensation to West German manufacturing workers is almost twice that of East Germans. West Germans even make 50% more than American manufacturing workers, due largely to the reduced value of the dollar compared to the deutsche mark. Also, East Germany, in theory, has a 44-hour week, but in practice they work far less because companies there employ more workers than they need as a way of providing some kind of job for all workers.

West Germans, on the other hand, not only make much more money, but their official work week is short and getting shorter. Last May, the metal workers’ union, IG Metall, won its long-sought goal of cutting members’ current 37-hour work week in stages to 35 hours by 1995. Corporate executives opposed the union’s demands for the reduced work week, just as they did in 1984, when the unions won the 37-hour work week. This time industry had the strong support of conservative Chancellor Helmut Kohl, who called the union demand “a stupid thing.”

But after a few “warning strikes” by the union, management gave in. The companies also agreed to a 6% pay hike, even though inflation is running only about 3%. Workers will continue getting the six-week annual vacations and 10 paid holidays most German workers get.

The 35-hour work week for 4 million German workers in auto, steel, electronics and other industries has firmed up a similar goal for the rest of Germany’s unions and other unions throughout Europe, to the consternation of employers in those countries. It will be a major issue for all of them when trade and other barriers among members of the European Community come down in 1992.

Another difference between workers in unified Germany is the influence workers and their unions have on their jobs. In theory, East German workers through their unions had a meaningful role in managing the state-owned companies. In practice, the unions were only “transmission belts” used by the Communist government to control workers and prevent strikes.

In contrast, West German workers, through their unions, have a substantive voice in corporate management at all levels. They do not have true co-determination, as they claim, because management has a majority on all corporate boards except in steel and coal. Nevertheless, the West German labor-management partnership is much closer to reality than the fake system of equality in East Germany.

That cooperative partnership of power sharing certainly helps explain West Germany’s high productivity and general prosperity.

West German unions--the largest and most powerful in the world--can help reconcile these and other huge economic, political and cultural differences between workers in the eastern and western parts of the country.

But it won’t be easy because the West German unions will be representing conflicting interests of workers from both sides of the now-destroyed Berlin Wall. West German unions have already opened offices throughout East Germany and are quickly becoming official representatives of millions of East Germans. East German unions made that goal easier by first sacking their hard-line Communist leaders and then simply voting themselves out of existence.

Germany is expected to resolve the enormous problems involved in reconciling the vast differences between the West and East. Despite its high wages and short work week, West Germany is Europe’s economic powerhouse, with a $139-billion favorable balance of trade, good profits and the prospect of ultimately becoming much stronger if the strength of a revitalized East Germany can be added.

That will be great for our former enemies, but will mean more devastating competition for workers both in this country and elsewhere around the world.