Partisan Gridlock

Jobs, Investment Pact Talks Falter

Grillo Wetzel Gabriel Reuters
Still on the same page? Industry association head Ulrich Grillo, trade unionist Detlef Wetzel and Economics Minister Sigmar Gabriel (l-r):
  • Why it matters

    Why it matters

    The parties are already bogged down in bureaucratic nitpicking, which needs to be put to bed before the inaugural meeting of the three-way partnership is March 3.

  • Facts

    Facts

    • The alliance’s goal is to maintain industry’s 22-percent share of Germany’s economic performance and continue to create jobs.
    • The Federation of German Industry is balking at the costs for setting up a foundation for the alliance.
    • A working group on “international competitiveness” has been added to the agenda.
  • Audio

    Audio

  • Pdf

Three months ago, the German economics minister heralded a new alliance between business and labor as the “future of industry.”

“Germany needs a concerted initiative of politicians, business associations and trade unions to remain a successful industrial country in the 21st century,” Sigmar Gabriel said on November 25.

Joining Mr. Gabriel, a Social Democrat, was Ulrich Grillo, the president of the Federation of German Industry, the country’s main industrial lobbying group, and Detlef Wetzel, the chairman of IG Metall, Germany’s largest trade union.

The partners agreed – in principle – to fight for greater support, more investment and more job security in industry.

But already, before they convene for their first meeting on March 3 to discuss details, the first rifts are beginning to show.

Broad alliances between German industry, government and labor –which might be considered politically impossible in the United States – are common in its social market economy. In the 1990s, then Chancellor Gerhard Schröder brought together the troika to push through  a set of unprecedented cuts in Germany’s social welfare benefits, which ended up fueling economic growth.

For much of the last decade, German labor unions pledged to moderate wage demands in exchange for job guarantees, a pact that limited employer costs and preserved employment while allowing German firms to stay competitive and weather economic downturns.

As Germany’s economic growth has slowed amid western economic sanctions levied on one of its major trading partners, Russia, political leaders led by Mr. Gabriel, who could be the SPD challenger to Chancellor Angela Merkel in 2017, are aiming for a new agreement to keep the economy expanding.

But the latest effort has bogged down along the usual lines in Germany, with employers and labor jockeying for a deal that best suits their interests. Added to the mix is Mr. Gabriel, who has been trying to cast a more moderate, business-friendly image in the run-up to the next election.

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