ECONOMY : German Union Forges Plan for Creating Jobs

By MARY WILLIAMS WALSH

Jan. 13, 1996 12 AM PT

TIMES STAFF WRITER

BERLIN —

As U.S. communications giant AT&T; sets the American economic tone for 1996 by laying off 40,000 people, German unions, managers and politicians are groping toward an alternative, worker-friendly economic arrangement--something to bolster this ailing giant through the hard times of the late 20th century.

The bedrock problem here is jobs. Although Germany’s highly regulated “social market” economy performs admirably when it comes to producing marketable goods and sheltering workers from the pain of downturns, it has been far less successful when it comes to creating enough jobs for all.

And after surging in December, German unemployment is reaching crisis proportions. Official unemployment for the nation hit 10.9% in December, with 3.79 million people out of work--the highest number since the prewar years, when Adolf Hitler exploited mass unemployment by turning public misery into support for his Nazi ideas.

Economists say the out-of-work number may well pass the psychologically important 4-million mark this month or next.

And that is just official unemployment. If the figure also includes the hundreds of thousands of Germans in government-led make-work plans and early retirement programs, plus the estimated 2 million who have given up looking for work altogether, the jobless total already hits 6.78 million.

These frightening numbers have made the creation of jobs this country’s premier political issue.

But even though the United States’ unemployment rate stands at a relatively attractive 5.6%, few German policymakers are looking across the Atlantic for solutions.

Flexible U.S. business practices--which allow the likes of AT&T; to hire and fire tens of thousands at will--are understood here to be good for business but incompatible with German assumptions about job security and social justice.

Thus, the search is on for an approach that will put greater numbers of people to work without stripping those already in the work force of the good pay and regulated benefits for which Germany is famous.

Under negotiation now is a proposal advanced by Germany’s largest union, IG Metall, which represents about 3 million steel, automotive, electronics and engineering workers.

The essence of the metalworkers’ argument is that by holding down real wage increases and the number of hours each employee works, Germany can make a significant dent in the ranks of its unemployed.

Specifically, union chief Klaus Zwickel has proposed what he calls an Alliance for Jobs, in which workers would do without a real pay increase in 1997 if, in return, industry would commit itself to creating 300,000 jobs over the next three years.

Zwickel is also demanding a government promise not to cut Germany’s menu of legally required social benefits.

Zwickel’s position marks a breakthrough for Germany, where it is rare for organized labor to accept a year without a real pay increase--or even to admit that any link might exist between higher wages and unemployment.

Zwickel has also recommended expanding a program, now in place at some German factories, in which workers are compensated for overtime hours with extra time off, rather than overtime pay. He has estimated that Germans worked about 250 million overtime hours in 1995. He claims that, if those hours were redistributed in the form of new jobs, 150,000 more people could be employed.

Bonn is staggering under the cost of unemployment benefits. Chancellor Helmut Kohl recently said job preservation and creation will be “the central domestic challenge of 1996.” He said he welcomed the IG Metall approach.

But business leaders have expressed reservations. They are wary of making large-scale commitments to job creation in the current, gloomy economic climate. They continue to talk about the need for “labor flexibility”--a polite term for greater acceptance of U.S.-style layoffs and pay practices.

Union and management representatives met earlier this week to discuss the Alliance for Jobs and are expected to meet again Thursday.

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It’s Payback Time

Since the mid-1980s, German workers’ wages have kept pace with inflation in most years. This is significant, since the country’s largest union is now proposing a year in which it would voluntarily forgo a real pay increase.

Inflation

1995: 1.6%

Figures before 1991 are for West Germany

Metalworkers’ Raises

1995*: 7.0%

* Combines two pay increases

UNEMPLOYMENT

Year / Jobless rate

1991: 7.3%

1992: 8.5%

1993: 9.8%

1994: 10.6%