From the point of view of many in the United States, the current success of Germany's economy is not far from a miracle. The export industry is strong and the International Monetary Fund forecasts a German unemployment rate of 5.6 percent for 2012. But how was the country and its manufacturing sector able to weather the economic and financial crises that hit U.S. companies and the labor market so hard?
For Michael Vassiliadis, president of Germany's industrial union for Mine, Chemical and Energy Workers, or IG BCE, and the newly created European trade union federation IndustriAll, the answer is surprisingly simple: thanks to German unions and a culture of dialogue with business. Seifi Ghasemi, chairman and CEO of the specialty chemicals and advanced materials company Rockwood Holdings, Inc., agrees. Their statements reflected in this article are based on a panel discussion organized by the Just Jobs Network in May 2012.
Let's start with Vassiliadis. He represents 8 million European industry and manufacturing workers. By focusing on high-value and specialized consumer products and by developing an industrial innovation network, as Vassiliadis calls it, the German export industry became highly competitive. Today the manufacturing sector adds 30 percent of value to the products it creates and the industry employs 30 percent of Germany's workforce.
These developments did not happen overnight. German companies have been investing in research and development for decades. They also profited from the political and economic developments after the fall of the Iron Curtain. Growing demand from central and eastern European countries as well as China helped spur the economic engine. Additionally, the introduction of the euro helped lower the real exchange rate and made the German economy more competitive. In 2011 exports to the eurozone countries made up about 40 percent of Germany's exports.
But what role did trade unions play in all of this? Some in the United States subscribe to the belief that unions are simply a cost factor, driving up unit labor costs and diminishing competitiveness. Additionally, they are often seen as inefficient organizations that stifle innovation and growth. For Vassiliadis this view of industrial relations is more a caricature than an image of reality for Germany. German unions are partners for businesses and through effective co-management in the form of legally secured co-determination, they have a say in developing long-term strategies for economic success for both businesses and workers. That leads to a sense of shared responsibility.
That does not mean that German unions do not represent the interests of their workers. They do, but they do more than that: Unions also look at the economic needs of the company understanding that a healthy private sector is also good for workers, and when workers and businesses work together, it fuels a healthy economy and society.
