Transport Turmoil

In Germany, Paralysis Nears as Rail, Air Unions Threaten Strikes

Sign no entry plane dpa
Germany could face transport chaos this week should rail engineers and airline pilots go on strike.
  • Why it matters

    Why it matters

    Germany may face extensive strikes as Lufthansa pilots and railroad workers across the country call for wage increases.

  • Facts

    Facts

    • Negotiations over pay between Lufthansa and its pilots, and German rail provider Deutsche Bahn and its workers, have not yet succeeded and the disputes are likely to escalate.
    • The German government is considering a new law which could restrict the number of unions in each industry.
    • After a decade of moderation, Germany’s trade unions have begun to call for higher pay.
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    Audio

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Just as Germans are returning from their summer holidays, two small, but powerful unions are threatening to bring Europe’s largest economy to a transport standstill.

Pilots at Lufthansa, Germany’s biggest airline, have warned that they could strike at any moment. Normally, travelers would switch to trains but locomotive engineers at Deutsche Bahn, the national railroad, are also threatening work stoppages.

The gridlock could be brought about by a group of 43,000 pilots, train conductors and locomotive engineers, who together have the ability to paralyze the country.

The Vereinigung Cockpit, a union representing Lufthansa pilots, on Friday threatened a new round of strikes in a long-running dispute over wages and early retirement benefits.

The union said pilots may strike “immediately” as negotiations have stalled.

A strike by Lufthansa pilots in April saw 3,800 flights cancelled and 425,000 passengers stranded. Lufthansa calculates that the industrial action cost it €60 million.

The main sticking point is pilots want Lufthansa to keep paying a “transition” benefit for those who retire early, while the airline wants to cut extra payments for new hires. Pilots can currently take early retirement at 55 and enjoy 60 percent of their salary for almost 10 years.

They are also demanding a 10 percent salary increase.

The airline has offered an additional €750 a month, while the union is demanding €1,500. “The demand is more than some employees at check-in earn at all,” a company spokesperson told Handelsblatt.

While a strike could be costly, the carrier’s weak profitability may force it to play hard ball.

“A strike will cost money, but on the hand if they don’t try to change something when it comes to the issue of early retirement, then it will cost them their competiveness,” said Heinrich Grossbongardt, an aviation expert.

 

Lufthansa pilots dpa
Lufthansa’s pilots union has threatened to have its members walk off their jobs this week. Source: DPA

 

The airline is threatened by low-cost airlines like Ryanair and increasingly price-aggressive competitors. In June, Lufthansa issued a profit warning in June, citing the pilots’ strike earlier in the year and competition from state-backed carriers from the Persian Gulf.

“It is a long-term existential question for Lufthansa,” Grossbongardt told Handelsblatt Global Edition. “The company cannot afford to continue with the benefits as they currently stand.”

“Lufthansa can only compete with them when they structurally change and when they sustainably change their cost basis. And the pilots’ salaries and benefits are a massive chunk of those costs.”

Lufthansa’s pilots make up 5 percent of the workforce but their earnings of around €1 billion make up a sixth of the company’s personnel costs.

Strikes are also imminent at Germany’s train service Deutsche Bahn, where the company has the added headache of dealing with two different labor unions. While the EVG, or railway and transport union, represents 140,000 workers, the German train drivers’ union GDL represents the company’s 20,000 locomotive engineers.

The EVG is calling for pay rises for Deutsche Bahn workers along with better conditions for retirement and higher pay scale groupings for many of its members but has not yet formulated specific demands. The GDL is calling for a 5 percent pay rise and two hours’ less work each week for all railroad workers.

The situation is further complicated because the two rail workers’ unions are competing for some of the same members. The drivers’ union GDL wants to expand its remit and take responsibility for a further 17,000 personnel. At the same time, the larger EVG is keen to take on 37,000 further workers including drivers, conductors, restaurant personnel and locomotive switching engineers.

Initially, employer Deutsche Bahn had called for this dispute to be clarified before negotiating the unions’ demands. But yesterday the two unions refused to accept a cooperation agreement suggested by Deutsche Bahn, saying they would continue separate negotiations. They have also rejected the 1.9 percent pay rise plus a one-time payment of €350 ($462), offered by the railroad company.

The situation looks set to escalate this week, the EVG is sending a questionnaire to its members on Monday asking what they want.

The last times such strikes affected rail travel was a warning strike in March this year. The trade unions also held a strike in 2013, and before that, waves of strikes interrupted rail travel in 2011 and 2007.

While chaos may not be avoided this week, the German government is seeking to prevent smaller unions being able to have such disproportionate influence in the future.

“It is a long-term existential question for Lufthansa. The company cannot afford to continue with the benefits as they currently stand.”

Heinrich Grossbongardt, Aviation Expert

Labor Minister Andrea Nahles, a member of the center-left Social Democrats, intends to introduce a bill that could effectively reimpose collective bargaining with one union per industry.  The proposed legislation which is part of the coalition agreement with Chancellor Merkel’s Christian Democrats would give priority to the wage agreement made with the union representing the most employees in any given company.

Some smaller professional unions, such as the group representing doctors, the Marburger Bund der Ärtze, are already threatening to make a constitutional complaint against the proposal.

Thorsten Schulten who specializes in European work and wage policy for the Hans Böckler Foundation, a think tank associated with Germany’s largest trade union federation, said the existence of small transport unions should not be regarded as an indication that the German industrial relations are becoming unnecessarily complex.

“There is a lot of talk in the media about the smaller specialist trade unions in Germany,” he told Handelsblatt Global Edition. “But actually this only applies to a couple of specific employment groups, doctors, train drivers and pilots.”

These unions represent particularly important areas and they attract a lot of attention, he said.

“I don’t see any indications that the trade union landscape will become more complicated. It isn’t a general trend nor is it likely to become one.”

Additional reporting by Dieter Fockenbrock, Christoph Schlautmann, Frank Specht

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