Budget Be Damned Union Boss Declares War

The head of Germany’s second-largest trade union says he’s ready to strike for higher public sector pay. It's time to end budget discipline, says Frank Bsirske, warning that it would be disastrous to argue that costs of the refugee crisis prevent wage increases.
Ver.di is ready to take to the streets like it did here in Lower Saxony last spring, said the union's chief Frank Bsirske.

Frank Bsirske, the chairman of Ver.di, Germany’s second biggest trade union, has thrown down the gauntlet to Chancellor Angela Merkel with a 6 percent pay demand for public sector workers.

In an interview with Handelsblatt, he said he had a well-stocked war chest for strikes and demanded that the government abandon its balanced budget policy and boost public spending.

At a time of negative interest rates, in which the government could make money by borrowing, it was “negligent” not to issue new debt to catch up on overdue infrastructure investment and social spending, Mr. Bsirske said in a wide-ranging interview from his sixth-floor office overlooking the Spree river.

The refugees are like catalysts highlighting the increasing workload in kindergartens, schools or the police force. Frank Bsirske, Ver.di chief

Just last fall, Ms. Merkel showered Ver.di with praise in a speech at its national congress. “Many people envy us for our system of partnership,” the chancellor had said. Germany had weathered the financial crisis thanks to moderate wage hikes and cooperation between employers, trade unions and the government, she added.

But that moderation is over, and so is the harmony, by the sound of it. Ver.di, which represents over 2 million workers in service industries, is demanding a bigger pay rise than any other German union at a time when inflation is virtually non-existent.

Germany’s biggest union IG Metall, which represents 3.8 million engineering workers, is demanding 5 percent more pay.

Ver.di had a combative year in 2015, calling strikes among post office workers, kindergarten teachers and workers at German sites of U.S. online retail giant Amazon. Asked if Ve.rdi’s war chest was full enough for another battle, Mr. Bsirske response sounded like a threat: “Don’t worry, it’s still so well filled that we can run and finance several big strikes at the same time.”

 

Frank Bsirske has led the Ver.di union since 2001.

 

He made clear he wouldn’t be deterred by the refugee crisis which is putting public authorities at all levels under increased financial strain.

“It would be disastrous if the attempt were made now to pit refugees and employees against each other,” he said. “They have had their noses to the grindstone in the past months, doing overtime and weekend work and now they’re supposed to be punished for that?”

He added: “The refugees are like catalysts highlighting the increasing workload in kindergartens, schools or the police force.”

Mr. Bsirske also said tax revenues were expected to keep on rising in the coming years and that Finance Minister Wolfgang Schäuble was wrong to stick to a balanced budget policy at a time when interest rates were negative.

The German National Budget-01 deficit surplus balance tax revenue

“Mr. Schäuble is being economically negligent if he doesn’t even use his constitutional scope to borrow in such a situation,” Mr. Bsirske said. “We in the unions will resist this lack of political common sense. Some €45 billion have to be invested in the transport sector alone.”

“I’m no miracle worker but we need an effective, competitive public sector and an end to pent-up investment. That’s only possible with more tax equality and policies that make economic sense.” He also called for reforms to reduce social insurance contributions paid by lower-income workers and said Germany was a “tax haven” when it came to large inheritances and wealth.

Mr. Bsirske’s stance on public spending echoed demands made by Economics Minister Sigmar Gabriel, the leader of the center-left Social Democrats, who has accused Ms. Merkel’s conservatives of valuing a balanced budget more than maintaining solidarity between Germans and newly arrived refugees.

Speaking ahead of three state elections on March 13, Mr. Gabriel distanced himself from the Christian Democrats, his party’s senior coalition partner, telling a Sunday newspaper: “If a revenue surplus in the budget is more important to the CDU than social cohesion, then they will carry partial responsibility for the radicalization of society.”

Mr. Gabriel called for increased social spending on German citizens to prevent resentment from building in society over the billions being allocated to integrate refugees. According to Handelsblatt’s sources, the Social Democrats believe €5 billion could be mobilized to increase pensions for low-income individuals and beef up other benefits.

The head of the Confederation of German Employers' Associations, Ingo Kramer, is alarmed at Mr. Bsirske’s tone. “Given the current budget surpluses there’s no reason whatsoever to think about new debts,” he said. Solid budgetary policy was a precondition for overcoming challenges sich as an economic downturn, demographic change or the refugee crisis, he added.

 

Frank Specht is based at Handelsblatt's Berlin bureau, where he focuses on the German labor market and trade unions. Thomas Sigmund is the bureau chief in Berlin, where he directs political coverage. Michael Maisch is the deputy chief of Handelsblatt's finance desk in Frankfurt.  To contact the authors: [email protected][email protected] and [email protected]