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International Socialism, Summer 1967


Volkhard Mosler

The Notebook

German wages


From International Socialism (1st series), No.29, Summer 1967, pp.5-6.
Thanks to Ted Crawford & the late Will Fancy.
Marked up by Einde O’Callaghan for ETOL.


Volkhard Mosler writes: Never was the position of West German workers on the labour market so strong as in 1965: for a time there were about 7 vacancies to each unemployed – in spite of 1.3 million foreign workers. The conscientiousness of the ‘hardworking Germans’ kept pace accordingly: at the time of the football match between Dortmund and Liverpool in April 66, up to 48 per cent of employees in the big steelworks of the Rhein and Ruhr stayed at home. Net wages and salaries rose 9.4 per cent in 1964 and as much as 11.4 per cent in 1965. The rate of inflation in 1965 and 1966 was considerably above the international level of 2-3 per cent at nearly 4 per cent. This increase in prices followed the 1964 boom which had resulted from a boost in exports. In 1965, because of higher imports (+19.8 per cent), West Germany’s balance off trade surplus was reduced to 1.2 billion Marks, and for the first time, the balance of payments showed a slight deficit. What worried the German capitalists and one of the reasons why Erhard had to go, was his readiness to pay part of the American’s big Vietnam-balance of payments deficit. In 1964 Erhard had promised Johnson to buy American armaments to the value of 5.4 billion marks up to June 67. At the end of 1966, when Erhard resigned, not one fifth of the promised purchase was complete. With the balance of payments running into a deficit, Erhard’s generosity met increasing hostility among capitalists. At the same time, Erhard who, as a dogmatic liberal economist, did not believe in planning and ‘incomes policy,’ was unable to stop profits falling. His moral appeals to ‘all market participants’ were not sufficient to cut wages effectively – in 1966 wages were again up 7.4 per cent despite the slowdown in productivity. A few days before he went, Erhard failed to cut welfare expenditures in the face of the resistance of the CDU’s trade-union ‘left.’ Price increases abroad could not prevent a relative decline in profits in 1965. In the boom year 1964, with a growth rate of 9.3 per cent in industrial production, gross profits of West German stock companies rose by about 15 per cent. In 1965, although production still rose by 5.8 per cent, gross profits fell by about 7 per cent. (This is an estimate of the Cologne Bank house, Herstatt). According to the Federal Bank in Frankfurt, profits in 1966 fell again by 10 per cent. This reflects partly the result that German workers have over the last 6 years regained some of the vast ground lost in the fifties. In the period from 1960 to 1966 income derived from employment grew by 10.9 per cent (relatively) whereas the number of employees in the same period went up only by 4.5 per cent. In real terms: up to 1960 the ‘wage sum’ (income derived from employment as part of the total national income) had fallen considerably. From 1960 to 1966 – due to the relatively tight labour market German capitalism had to operate in (after the Berlin wall stopped skilled workers leaving East Germany) – the ‘wage sum’ went up from 60.8 per cent to 67.4 per cent, whereas the share of employees in the total working population in the same period went up from 77.3 per cent to 80.8 per cent.

The first to act was the chairman of die Federal Bank, Blessing. In May ’66 he stated that ‘we’ need some 500,000 unemployed, and in May, he put the bank rate up to 5 per cent. The consequences are clear now: by February ’67’ ‘we’ had nearly 700,000 unemployed (or 3.1 per cent). We have at the same time a new CDU-SPD Coalition Government, an ‘Incomes Policy,’ a trade-union movement, which has completely lost its sense of direction and for the ruling-class the most important result – real wages falling in March ’67 for the first time in the history of the Federal German Republic. The ‘apertura a sinistra,’ ‘die Öffnung nach links,’ (opening to the Left) – the participation of social democratic or other working-class parties in Government – has worked out in Germany as well as in Italy, Britain and Denmark. When the coalition government was built in December last year the Industriekurier – the German Financial Times – wrote: ‘The SPD has its great challenge in the new government ... The close ties between the SPD and the trade unions, which hitherto helped the trade unions influence the welfare politics of the SPD, must now serve the SPD to influence the trade-union leaders.’ (Industtrekurier, 24 Jan 1967.) This ruling-class strategy has Worked out very well indeed. The ‘black-red’ government could hardly be more reactionary. It has cut back welfare expenditures, has increased purchase taxes, and refuses to pay its total contributions to the old age pension scheme. On the other side it has given extra tax reliefs, to the capitalists and has increased considerably its investment budget to boost profits indirectly. The SPD Minister of Economic Affairs, Schiller, and his friend, Strauss (CSU), Minister of Finance, have done everything to cut back ‘consumption expenditure’ and to increase ‘productive expenditure.’

The most important part of the parcel is of course the ‘incomes policy.’ Schiller calls it ‘konzertierte Aktion’ (concerted action). It works on a voluntary basis, but it works. The trade union leaders make the point that the wage ‘guide line’ of 3.5 per cent is not a guide line. Up to the 22 November 1966, the German TUC refused to discuss aa incomes policy, but when Erhard gave way to Kiesinger in December, Schiller summoned the TUC leaders and everything worked out. Otto Brenner, President of the metal workers union (the German ‘Frank Cousins’ and leader of the trade union Left), said on 23 November that the danger of stabilising the economy at the expense of the workers had not yet been averted. He warned the trade unions to prepare for a period of stiff conflict. One is still waiting. Every single union leader has succumbed by now to Schiller’s concert, Brenner included. The most key battle lost was that by the Chemical Workers Union (IGCh). It was important because the IGCh – considered to be the most militant union today – was in an exceptionally good situation. Output in the chemical industry had gone up by 8 per cent in 1966; it was one of the few industries which had not been hit by the squeeze. The Union had asked initially for an 8 per cent increase. They got 3 per cent for 15 months in the end. The employers are playing their part in the game. They are tackling the wage drift and private social reforms everywhere. Thus the metalworkers’ union reckons that in the Baden Würtemberg area a quarter of all workers in the local steel industry were, on 1 Jan. ’67, not enjoying the 1.9 per cent wage increase agreed in Feb. ’66 and that instead the tendency was for the wage drift to diminish. Schiller, himself has stated several times that he expects the wage drift to diminish. It is from the shop floor and from some local trade-union branches – especially from the metalworkers – that the only opposition to the ‘incomes policy’ has come so far. There were a few unofficial strikes in the second half of last year. There have been some more reported lately. Most of them have been successful. But generally the response even from the shop floor has been poor. The German workers will have to learn again how to fight after such a long time of interrupted rising prosperity.

It is not surprising that the trade-union ‘left’ – after much noise against the big coalition – has swallowed Schiller’s pill. In their last talk with Schiller, virtually all trade-union leaders accepted that profits should rise about ten times quicker than wages this year. The Metal Workers’ Union is pressing for a modest 3.5 per cent increase for 200,000 of its 2 million members at the moment. The employers want a stop. There has been some dissent within the union lately over the question what and how much one should press for. The union does not want to lose face completely. But this will not be easy.

What one might be surprised about is the fact that even important parts of die Marxist left have shown considerable confusion on the issue of ‘incomes policy.’ IS readers will recognise some of the alternatives: ‘open the books,’ ‘more workers’ control at the shop floor level,’ ‘a guaranteed annual wage.’ One has – to give a more concrete example – the express international writing: ‘The question is not merely to refuse or accept the concerted action. It depends on what you make of the situation, what sort of positions the labour movement can extract with lower wage increases or instead of wage increases. It is only ... if the unions remain on all battle fronts that they will give themselves up.’ The writer goes on asking for more ‘workers’ control’ and some other nice things. The express international is – to explain something – the monthly coalition paper of some friends of the Metal Workers’ Union and the German section of the Fourth International. But you still cannot have both: workers’ control and an incomes policy.

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