West German Wages And Prosperity

Press, Volume CII, Issue 30130, 14 May 1963, Page 12

West German Wages And Prosperity

Till recently West Germany has enjoyed relative freedom from labour troubles. This has been at once a contributory to and a consequence of the economic boom that appears now to be ending. Ironically, the principal architect of West Germany’s post-war prosperity, Dr. Ludwig Erhard, is likely soon to succeed the 87-year-old Dr. Adenauefr as Chancellor. Dr. Erhard’s succession has been secured only after a remarkable struggle with Dr. Adenauer, who maintained till the final vote within the Christian Democrat Party his reluctance to step down and his outspoken antipathy to his Economics Minister. Some idea of the problems that will confront the new Chancellor has been given by the wage dispute in the metal industries—a dispute that led first to a strike, then to a lock-out by the employers. For more than a year it has been plain that wages throughout German industry cannot continue to increase as consistently as the workers have grown accustomed to expect. The country has been brought face to face with the familiar difficulty of harmonising wages and productivity. Unemployment is still negligible; but during 1962. while the output for each employee advanced by 2 per cent- wages increased by 8.4 per cent Germany is in danger of pricing itself out of world markets; already the export surplus is diminishing steadily.

Good industrial relationships encouraged hope that German economic stability would not be jeopardised by unreasonable demands from workers. This view was fortified early in 1963 when the building workers’ union announced an agreement whereby wages were tied to the cost-of-living index and the gross national product. At the last congress of the German Trade

Union Federation, however, the metal workers opposed the change from the traditional pattern of wage bargaining; and subsequently they began their test of strength against the employers. Because of the forthcoming change of Chancellor, the metal workers’, dispute is far more important than ordinary wages wrangles. Dr. Erhard is commonly regarded as being much less inflexible than Dr. Adenauer; indeed, his adaptability to circumstance equipped him with the endurance to await the

succession. West Germany probably faces no greater perplexities than any other industrial country; but it is fast emerging from its vital period, of post-war reconstruction, and wage restraints may well be crucial. How Dr. Erhard copes with the metal workers could set the pattern domestically for the post-Adenauer regime.