IG Metall and the industrial downward spiral

Significant parts of German industry are in a downward spiral that cannot be broken without taking steps to reduce production costs. Since there is unlikely to be any change in high energy prices, climate protection requirements and tariffs, other steps are necessary to ensure that companies become more competitive again, so that domestic production becomes more profitable again and the decline of the industrial location can be stopped.

The government would have the power to put a stop to the rapid increase in additional wage costs. Whether she will find the strength to do so is still up in the air. It would be all the more up to the collective bargaining parties - or more precisely: IG Metall - to contribute to stabilizing the industry and its jobs in Germany. Otherwise it will be up to companies to reduce their costs, among other things, by further reducing their workforce, perhaps in conjunction with relocating production abroad. This is the coordinate system in which the collective bargaining parties in the metal and electrical industries operate.

But IG Metall is now using this coordinate system to demand five percent wage increases. Taken at face value, the outlook for a new recovery driven by private investment and new confidence from potential investors looks bleak. Five percent, which is a good two percentage points more than the expected inflation rate and three percentage points more than the central bank's target inflation rate. But not even a limited tariff increase would be covered by productivity increases. These are the reliable economic measure for a wage policy that stabilizes jobs.

And what else could justify a five percent demand? Even the vague signs of a small economic improvement cannot do it; they essentially go back to a debt-financed flash in the pan by the government. In the language of IG Metall, however, the class struggle-inspired goal of a “redistribution” from capital owners to employees is added. The so-called wage share, the share of wages in national income, is already at a historic high. The share of capital and property income is correspondingly low. The notorious weakness of private investment correlates with this.

However, trade unions are not open to such considerations. They move in their own theoretical worlds in which wage increases are ultimately financed through national debt. On the other hand, abstract economic arguments basically only serve to rationalize the moods of their members. In the negotiations with the employers' associations, which are also under high pressure from their members' expectations, IG Metall will be concerned with finding common solutions. These must always be sustainable on their own. Tariff policy cannot speculate on cost compensation through additional state aid for industry.

There remains hope that IG Metall has often moved away from combative starting positions in the course of collective bargaining rounds and taken a more pragmatic approach. But with her demand she is sending the self-righteous message: “We are not paying for your crisis.” The union not only demands inflation compensation from companies that are themselves under inflationary pressure. She reinforces the message by flatly dismissing the industry's structural crisis as a “management failure,” which is why union members should not be bothered with it.

High energy costs and deglobalization are causing a loss of prosperity across the entire economy, which no group can easily escape. In addition, a notorious political aversion to reform in the country has exacerbated the cost crisis, with the influential involvement of the trade unions. The sharp increase in social security contributions is the result of an overly liberal use of contribution money - for example, when it is distributed as a tax-free early pension without any further indication of need. With their anti-reform demonstration planned for Saturday, the unions are marching further down this slippery path.

Even union members cannot simply isolate themselves from the overall economic situation - except at the expense of others, who will then be hit even harder. IG Metall must be careful that these “others” do not become an increasing number of job losers within their own ranks.