GLOOM AFTER THE BOOM

Press, 30 December 1982, Page 11

GLOOM AFTER THE BOOM

Pessimistic Germans look back

and fear for the future

ROBERT TAYLOR,

of the London

“Observer,” reports on the growing price West Germany pays to preserve its “social peace.”

Half a century ago, Adolf Hitler stormed to power on a wave of unemployment and social unrest. Today, that frightening past casts a long shadow over a West Germany which has seen its

much vaunted economic miracle (wirtschaftswunder) stalled in its tracks. The country which some international economists were promoting — even as late as a year ago — as a locomotive to pull the rest of the Western, industrialised world out of recession, has run out of steam. And the swift collapse of the labour market this year, West German forecaster, argue, has shown up the vulnerability of such basic industries as steel, shipbuilding, and ing“Our economy is like a Potemkin village. Behind the facade lies decay,” says Heinz Nole, editor of “Weser Kurier,”. the leading newspaper in Bremen, a city with 11.3 per cent jobless, mainly because of the rundown in shipbuilding, aerospace, and fishing. But it is not only in cities like Bremen that some West Germans are looking nervously over their shoulders at the events of 50 years ago. Many more remember the crippling years between 1949 and 1952; those post-Hitler war years of massive population shifts from the East and the’revaluation of the mark which caused a shortage of work for millions. Those were the years of

total devastation. There was only one way tb go — up, with a helpful boost from Marshall Aid. Conditions, 30 years on, are different. And nobody has much hope of a dramatic turn around. Equally, very few foresee a repetition of the national psychosis which followed the economic waves of the Wall Street crash. Even the fashionable pessimists who abound in West Germany do not generally believe that their country is about to erupt into political extremism and' conflict on the scale which destroyed the shaky Weimar Republic. But everybody agrees the future looks bleak, an apparently obvious conclusion to draw after looking at the gloomy labour market forecasts up to the year 2000 drawn up by the Labour Ministry in Bonn. There are now more than two million jobless in West Germany (8.4 per cent of the labour force). This is 37 per cent higher than in November, 1981, and does not take account of the more than a million workers on shorttime. For many of these people, the cut in the working week is the half-way house to the dole queue. With less than zero growth expected in 1983, and a net

rise of at least half a million in the- workforce over the next two years, West Germany’s unemployment total seems destined to soar over the three million mark. “I can. see nothing really to stop it now,” observed one worried civil servant. Bonn economists reckon it would need a massive annual growth rate of 4 to 4.5 per cent sustained until the end of the century to bring back the full employment that West Germany enjoyed between the middle 1950 s and middle 19705. If the country managed to achieve a 2 to 2.5 per cent growth rate over the two years,. the numbers out of work would still be more than two million, on the most optimistic assumption. West Germany has apparently been slow to adapt to the new age of micro-techno-logy. Its abundance is built on the heavy manufacturing sector. “Capitalism is doomed,” says Erich Krohn, a leading Green Party member in Hamburg. He sees a Ghandian future of no growth, simplicity and a rejection of market values. But apart from the idealistic young from the middle class, it is doubtful whether many West Germans share such a vision.

There is a national anxiety angst — about the economic and social fabric of society. And, on both sides of industry, there is an equal anxiety to deal with it by maintaining what West Germans call the “social peace” the partnership between capital and labour that replaced the class war. "We all want the consensus to survive. We have a duty to keep it,” declares Heinz Voreweg of the D.G.8., West Germany’s national trade unions federation.

“There is a common wish to preserve the system," echoes Bernd Heinzemann from the powerful Employers’ Association. But in September, more than half a million trade unionists paraded through the streets in the big cities to protest about rising unemployment. No political party in the runup to the next federal general election (expected on March 6) wants to upset organised labour. The official sensitivity to union feelings was on display this month when a deal was struck to save the ailing Saarland steel company of Arbed Saarstahl from collapse — much to the chagrin of the European Economic Commission. Bonn agreed to release further funds to prop up the company in return for a minor sacrifice from the workers which the metalworkers union accepted with reluctance. They will go without half their so-called 13-month annual bonus for

two years, starting in December, 1983. Similar care is being taken at the shipyard of Blohm and Voss in Hamburg where frigates are nearing completion for Argentina and work looks hard to find after next year. The company’s labour director, Mr Knodler, and chief 'shop steward, Mr Taschenberger, parry points about the plan to slim down the workforce.

They have reached a deadlock after hours of effort to reach agreement, but the local arbitrator will try and find a way through that both sides will accept. At Bremer Vulcan shipyard in Bremen, ' a deal was reached to boost productivity to save 15 per cent labour costs, with a willingness by the workers to co-operate. The metalworkers are pressing for a 6.5 per cent pay rise, but both sides recognise the final rise will be around half that figure at best — and achieved without any shop-floor conflict. The price of keeping the “social peace” in West Germany is starting to look impossibly high. There may be a sense of shock among some of the unemployed, but the jobless at labour exchanges I met in Hamburg and Bremen seemed unconcerned about prospects. Union officials may argue the contrary, but by international standards, West Germany looks after its unemployed in a generous spirit. All unemployed workers receive 68 per cent of previous net basic wages up to a maximum of $32,000 a year for 12 months. Social insurance and pension contributions are paid on top of this by the State. After a year without work, the job ,o ’s get

58 per cent of previous net basic income plus . social benefits dependent on family needs, and these are paid out indefinitely until work is found. None of these benefits are taxed. Ever since Bismark a century ago, Germans have taken pride in their generous and comprehensive . social welfare system, but a growing number of people in Bonn wonder how long the country can afford to carry on with its relatively lavish hand-outs. Next year, West Germany will spend more than $24,000 million in benefits for the unemployed, yet the country is already running a huge deficit of nearly $19,000 million and the proportion of its GNP devoted to social spending has leaped from 20 to 32 per cent over the last decade, while the proportion going into investment has shrunk from 25 to 20 per cent. For all its impressive productivity- performance over recent years, West Germany looks like a country living way beyond its means. But the politicians are frightened of making a direct assault on the value of unemployment benefits. The Schmidt Government chipped away at the benefit’s edges during its last year and the new C.D.U./F.D.P. coalition of Kohl has gone a little further. The period of qualification for unemployment benefit has been lengthened from 12 to 18 months in work and there has been a cut from 80 to 70 per cent of previous basic wages paid out to those unemployed who opt to joint a training scheme. * The unions say that the 68 per cent level of benefit is sacrosajict, but employers complain about the heavy

overheads they must bear to keep the welfare system going. It will take strong nerves to make a move against the welfare system, but with a consensus between the parties on the need for a restrictive and conservative prudence in economic management, there may be no alternative.

Around 27,000 people are covered by — rather wasteful — job creation programmes now. less than half the number five years ago. But the training system is different. West German's con-

tinue to believe in the merit of training. “Employers might think it makes business sense to cut back on training schoolleavers, but they believe they have a moral obligation to give them apprenticeships,” says the employers’ association.

Over 660,000 young Germans started their three years of formal training this year, in spite of the worsening slump. This is done by entrepreneurial initiative — not through State aid. All the same, the labour exchanges

are worried about what they see as a rise in youth unemployment. At the last count, 190,851 under 20-year olds were without a job or training, 8.9 per cent of that workforce and a 36 per cent jump on last year.

Protecting the young remains a vital part of the “social peace.” Officially, efforts are also being made to lessen the stress on foreign workers, with 272.606 of them among the jobless (13.2 per cent of the unemployed). Perhaps the shopfloor is

more phlegmatic than the employers, unions, and politicians believe. “In Britain you have apathy and passivity with mass unemployment. It won’t be the same here,’’observed one union official.

Possibly tempers and nerves will snap as the dole queues climb, but almost everybody in West Germany wants to preserve what they have and shun the extremes. The horrors of modern German history are likely to dictate a caution and a sense of community whatever the pessimists may say.