Opel crisis

One of the most important points at issue in the grand coalition is how to deal with the ailing auto concern Opel, the German-based subsidiary of General Motors. In the past few days politicians in the CDU/CSU and FDP, together with leading business association figures, have argued that any rescue plan for Opel should be ditched in favour of insolvency for the company. Interior Minister Wolfgang Schäuble (CDU) has praised German insolvency law as "most modern." Insolvency does not mean the automatic closure of all of Opel, but "liberation from old burdens" and the "reorganisation of the company on a stable basis," he contended. The new chairman of the board of experts of the federal government, Wolfgang Franz, has argued in a similar manner. In the Bild newspaper of March 17, Franz declared, "It is not the task of the state to save Opel." The company had to be able to compete on the market or must declare insolvency. He also stressed that "the junking of old burdens" by insolvency proceedings would be advantageous. What both Franz and Schäuble neglect to mention is that a substantial part of the "old burdens" from which the company is to be liberated are the contracts of the workforce regulating their wages and social conditions. In the event of insolvency proceedings such contracts are rendered invalid, and the rights of employees are reduced to the legal minimum. If and when the company would resume operating is an open question. What is clear is that if part of the workforce is re-employed they would be required to work under completely different, i.e., substantially worse conditions. Insolvency proceedings would result in the dismissal of thousands of workers and would constitute the first step towards an existence dependent on the miserly Hartz IV welfare payments introduced by the Schröder government. Those "lucky" enough to retain their jobs would be required to accept drastic cuts in wages and benefits. Schäuble, Franz and company summarily dismiss the argument that Opel is too big to fail and its insolvency would result in the impoverishment of thousands of workers and their families. According to the business associations, the fact that Opel employs 25,000 at its four German plants, with another 30,000 employed in other European locations backed by 300,000 jobs in subsidiary industries, is precisely the reason why insolvency proceedings should take place. Opel is to be used to set an example. Insolvency on the part of Opel would be the prelude to a major assault on the wages and working conditions of all workers. It is part of a shock strategy aimed at reducing the living standards of workers to the levels experienced by their fathers and grandfathers in the 1940s and 1950s. Mannheim economics professor Wolfgang Franz, who as chairman of the board of experts has close links to the chancellery, has long represented radical free-market opinions. He belongs to the "Stiftung Marktwirtschaft" (Market Economy Foundation), which aims at a radical lowering of taxation for companies and plays an important role in bringing together business and political circles. Franz has repeatedly spoken out against the introduction of a minimum wage and in favour of cheap-wage jobs. He made headlines two years ago when he argued, in all seriousness, that five euros per hour was too high a wage. At the time, Spiegel-Online headlined an article on the topic: "Economics expert wants hourly wages under three euros." The magazine wrote: "Franz warned in a newspaper interview against the introduction of a minimum wage. Instead one must further lower current wage levels of three or four euros in order to create more jobs. A minimum wage would only lead to a massive loss of cheap-wage jobs." Franz, who also heads the Centre for European Economic Research (ZEW) in Mannheim, has again called for further reforms on the job market. If there is no majority for the dismantling of existing contract laws and regulations protecting against dismissal, then a wage system should be introduced that enables the state to supplement cheap wages and thereby provide relief to companies. The SPD, which has been involved in the German government for the past decade and was responsible for the creation of a comprehensive low-wage sector, is now attempting to portray itself as the friend of the Opel workers. The party has warned of the social consequences of insolvency for Opel. At the start of this month, the foreign minister and SPD chancellor candidate Frank-Walter Steinmeier made a very public appearance before Opel workers at the company's main plant in Rüsselsheim and promised the workforce his support. In fact the SPD rescue plan, which is also supported by the IG Metall trade union and its works councils, is no alternative. The SPD merely wants to keep the patient alive until after the elections. The SPD rescue plan is also directed against Opel workers and aims to blackmail them. According to the SPD and trade union plan, state support and endorsements will only be made when the workforce agree to job reductions and wage cuts in order to secure the profitability of the company.

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Blip | April 24, 2009

Tags:. .reorganisation. .cdu. .csu. .invalid. .subsidiary