Union boss warning

The Human Cost of Digitization

hoffman
Reiner Hoffmann worries that new technology firms such as Uber are not looking out for their workers.
  • Why it matters

    Why it matters

    German unions fear that workers rights will be diluted or forgotten in the rush to digitization.

  • Facts

    Facts

    • The federal government’s Industry 4.0, Economy 4.0 and Work 4.0 plans are aimed at digitizing its economy.
    • The country has fallen behind rivals such as the United States in its bid to digitize.
    • Unions believe some digital firms, such as taxi service Uber, run roughshod over workers’ rights.
  • Audio

    Audio

  • Pdf

This week is filled with events relating to the digitization of the economy. The parliamentary group of Germany’s center-left Social Democratic Party began the week on Monday with a conference on Internet policy, the German Federation of Trade Unions, the DGB, holds a similar event on Tuesday, and on Wednesday the parliamentary group of the center-right ruling Christian Democratic Union is hosting an event titled “Economy 4.0 – Opportunities for Germany.”

But in the debate over digitization Reiner Hoffmann, head of the Confederation of German Trade Unions, has a big concern – he wants to make sure human beings take priority over technology.

 

Handelsblatt: Do you agree that we should not stand in the way of the digital revolution and exploit its advantages?

Mr. Hoffmann: We should take advantage of the opportunities, but we also can’t be blind to the risks. Most of all, the focus must be on human beings. We can’t simply ask what is technically feasible, but also what is socially desirable.

Is the German economy sufficiently prepared for digitization?

If you look at online retailing or online banking, you can see what upheavals are currently underway. Particularly small and medium-sized companies and people working in skilled trades should quickly prepare for the change and ensure their employees are qualified. If a technician shows up today to perform maintenance on a highly complex heating system, he is quickly stretched to his limits.

Most of the companies invited to the many digitization conferences underway at the moment are established businesses. Are startups being ignored?

They aren’t being ignored, but Germany has taken too long to discover and promote them. Still, industry and service providers are now trying to develop closer relationships with young IT firms.

But a European Google will remain nothing but a vision?

We can certainly catch up to the Americans, but that requires the necessary investments. We are practically a developing nation when it comes to broadband installation. Besides, all that glitters is not gold in the United States, as I realized when I visited Silicon Valley in the summer.

How so?

The Americans have companies such as Amazon and Google, and yet they lack capacity in innovative machine building, for example. Google is conducting research into driverless cars, but they won’t be successful without highly innovative vehicle manufacturing. The Americans have also recognized that a service economy alone is not enough to succeed in the future, and they are making every effort to re-industrialize.

We say we want a European Google, but then along comes something like the Uber car service, which is revolutionizing the taxi industry but maddening traditional taxi drivers, and we decide we don’t like all of it…

I would also approach that in a more nuanced way. I met with Uber management a few weeks ago. They said that downtime in the traditional taxi business is 70 percent, compared to only 40 percent at Uber. That’s an impressive productivity boost. But the system has failed to sufficiently benefit drivers.

Why?

Because Uber sees itself purely as an Internet platform and not as an employer, even though it clearly is one. It is also running into legal problems in the United States at the moment. It’s unacceptable for people to offer their manpower without any rules whatsoever, and for the company to behave as if they were dealing with an army of freelancers – and yet these people don’t even have a say in setting prices.

So what should be done?

Social security, pensions, working hours – all of these things can’t be left up to the vagaries of the Internet economy. We need a new definition of the concept of the employee.

How can the social safety net be established for “click workers,” self-employed people who compete for orders on Internet platforms?

I’d like to bring universal healthcare into play here. Germany has a labor force of 42 million people, of which about 33 million are employees subject to social insurance contributions. That’s a big discrepancy. We need binding retirement security packages for new forms of employment, or else we are headed for rising poverty levels among the elderly.

The 9-to-5 job hardly fits into the digital age, either…

Of course we want to take advantage of the flexibility in working hours that comes with digitization, but it shouldn’t be in a one-sided way that only benefits companies. We need to structure working-hour concepts more innovatively through collective bargaining agreements or company agreements so that employees get more control over their working hours. That will create a win-win situation.

Employers have already proposed switching from a daily to a weekly ceiling on permissible working hours. That would be one approach, wouldn’t it?

It would be fatal to suspend maximum working hours or rest periods. The eight-hour day is a social achievement that we will not put up for negotiation. Today’s collective bargaining agreements already stipulate that working hours can deviate from the norm by up to 25 percent, up or down. That leaves plenty of room for variation.

So we don’t need a regulation to limit stress in the workplace?

Yes, we do. Today 40 percent of employees are no longer protected by collective bargaining agreements. This is where lawmakers need to set limits, so that they will not be abandoned to the forces of the market.

So this can only be achieved through new legislation?

Employers who abdicate their social responsibility and withdraw from tariff commitments should ask themselves what they prefer: Negotiating with unions or relinquishing control to the government?

In addition to working hours, qualification and advanced training are the key issues in the debate over Work 4.0 [Germany’s federal plan for the future of employment]. What are your expectations in this regard?

Look at the overfilled classrooms and the technical equipment in many schools. We have to be careful to ensure that those pupils aren’t left in the dust by digitization. But companies also have to recognize that advanced training isn’t just a cost but also an investment in the future.

So what do you expect?

We need to get to a point where employees don’t have to fight an uphill battle to get advanced training but are actually given a vested right to it. To do that, we have to create more scope for development across the entire working world – and employees can’t be left without wages and salaries during this time.

Where is this scope for development supposed to come from in profit-oriented companies?

It can be regulated through collective agreements or by law. I don’t want to rule out employees making a contribution of their own, such as a portion of their free time.

Chancellor Angela Merkel is skeptical about further regulation and has already advised the labor minister not to pursue anti-stress regulations or the directive on workplaces…

We need to put an end to this nonsense of immediately discrediting every regulation as unnecessary bureaucracy. Companies, which are dependent on uniform competition conditions, are also secretly aware of this.

 

Frank Specht is a Handelsblatt editor focusing on the German labor market and trade unions. To contact the author: specht@handelsblatt.com

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