From: Zeynep Tufekcioglu <zeynept-AT-turk.net>
Subject: M-I: Unemployment in Europe (prescription A) by Joao Paulo Lopes
Date: Fri, 6 Jun 1997 11:39:35 +0300



>Date: Fri, 06 Jun 1997 09:06:32 +0100
>From: np06pc-AT-mail.telepac.pt (617601 - Joao Paulo Lopes Monteiro)
>Reply-To: jpmonteiro-AT-mail.telepac.pt
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>To: marxism-international-AT-jefferson.village.Virginia.EDU
>Subject: Unemployment in Europe (prescription A)
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>I don't agree with much of Chris' analysis of current european politics,
>though there seems to be a "left-of-center" tide, possibly reaching
>Germany next. In my account however this is only a consolidation of the
>gains the bourgeoisie has made during its frontal assault of the 80's.
>As the structural crisis deepens, policy choices within the margins of
>the system are narrowing and narrowing. It's what the french call "la
>pensée unique". In Europe this will have dramatic effects on its social
>(and even civilizational) model on the years leading to the common
>currency and beyond. So called "globalization" only marginally has to do
>with it.
>
>The main (structural) problem is the crisis caused by the downfall of
>the profit rates, as predicted by... you know who. The organic
>composition of capital is rising. Workers are found to be redundant. But
>only living work can valorize capital under the present relations of
>production. So the bourgeoisie has no other choice than to procede with
>class warfare: compression of wages, deregulation, casualization, etc..
>They say this will create new employment but only some part time
>"mac-jobs" in unproductive sectors are likely to appear. This is the
>policy we are likely to see from any bourgeois parties in office. Until
>it runs into a crisis of underconsumption... They are sailing from
>Scylla to Carybdis, with ever less margin of manoeuvre.
>
>
>Jo=E3o Paulo Monteiro 
>
>
>-------------------------------------------------
>
>EUROPE LOOSENS UP
>    ONCE-RIGID EMPLOYMENT LAWS, THE BANE OF
> BUSINESS AS WELL AS THE JOBLESS, SHOW SIGNS OF
>                             FLEXIBILITY
>
>BY JAY BRANEGAN
>
>
>When Viessman Heating Works in the German state of Hessen wanted to
>produce a spiffy new gas boiler to beat the competition, it was strongly
>tempted to produce it in the Czech Republic, where labor costs are a
>fraction of Germany's. Instead, last winter, it offered its 1,200
>employees a deal: work a few more hours for slightly lower pay, and the
>boiler will be built at home. Some 95% of the workers voted in favor,
>and the new production promises to create 250 jobs--German jobs--over
>the next three years.
>
>At Holland's Rabobank, management struck a different bargain. In return
>for a shorter work-week, employees agreed to work up to 9 p.m. if
>necessary without overtime pay, and to accept a cut in bonus pay for
>Saturdays from 100% to 25%. "The flexible schedules make it possible to
>improve our services--for example, longer opening hours," says Wim van
>Manen, head of the bank's Dutch personnel department. And the biggest
>plus of all: the arrangement enabled the bank to recruit about 600 more
>staff last year.
>
>With little fanfare, continental Europe's notoriously rigid labor
>markets are starting to loosen up. And none too soon, say economists,
>who lay much of the blame for the continent's chronic unemployment
>crisis on overly protective labor regulations and pay practices. Among
>the problems: high minimum wages, expensive non-wage costs, restrictive
>work rules, uncompetitive pay levels, and laws against dismissing
>employees so strict that employers are reluctant to hire new workers in
>the first place. Despite moderate economic growth, the European Union's
>overall jobless rate has hovered around 11% for more than two years, a
>figure far higher than in the U.S. or Britain, which
>offer far less job security and, especially for unskilled workers, lower
>wages.
>
>Although Europe is still far from the American easy-hire, easy-fire
>system, quiet changes are afoot. "The European labor market is much more
>flexible than people think," says David Shonfield, a senior researcher
>at Incomes Data Services (IDS), a London consulting firm. In some cases
>governments are changing legislation. In others, companies and workers
>are finding creative solutions to deal with--or get around--job-killing
>labor laws.
>
>In Spain, employers and unions last month reached a landmark agreement
>to cut the exorbitant cost of dismissing workers, who were entitled to
>45 days' pay for every year worked if their firing is "unjustified,"
>which is almost always how labor courts see it. That was the most
>generous severance package in Europe and the chief culprit for the
>staggering 21.4% of Spaniards who are out of work. Under the agreement,
>a new four-year contract will be offered with roughly half the maximum
>severance pay. Moreover, the changes aim to make it easier for companies
>to claim "justified" dismissals, which entitle sacked workers to a
>smaller package. In return, the unions won curbs on
>unpopular temporary contracts, which have come to dominate the labor
>market. (In the last year, 95% of new hires were under temporary, or
>"junk" contracts.) Employers' representative Jose Maria Cuevas says that
>now "all parties" blame high firing costs for unemployment.
>
>In France, with a crippling 12.8% jobless rate, the government last year
>passed legislation offering a 40% reduction in social charges on all
>salaries paid by any employer who cut the work week by 10% and raised
>staffing levels by a similar amount. For those who cut hours and
>increase staff by 15%, social charges on both old and new salaries are
>slashed 50%. In neighboring Belgium, new rules reduce social
>contributions for certain companies by about $4,300 per year for every
>new job created, and regulations that limit night work for women were
>struck from the books. The
>government has also proposed to cut social security contributions for
>distressed companies that reduce working hours instead of resorting to
>massive layoffs.
>
>Although the German government's grand "Alliance for Jobs" strategy of
>last year failed to shrink ballooning jobless rolls, local unions and
>employers are proving adept at devising their own arrangements
>plant-by-plant. "Negotiated flexibility is a trend that's bound to
>continue," says Peter Burgess, an expert on Germany at IDS. In eastern
>Germany, where the economy continues to limp despite huge massive
>subsidies, it is common for companies to ignore national guidelines
>which already permit them to offer lower wages for longer hours than in
>the west, and to negotiate "hardship" clauses that demand even more more
>flexible hours and still lower pay.
>
>In the rest of Germany, the so-called Mittelstand-small and medium-sized
>firms which form the backbone of the economy-are switching to a flexible
>32- to 40-hour week, a practice that once would have been anathema. A
>company may pay a lathe operator for a 35-hour week all year long even
>as he varies his working time depending on the needs of the plant. The
>firm tallies up his actual hours annually, paying him overtime only if
>his total exceeds the agreed level. "In the past two years there has
>been a rapid development of this trend," says Andreas Pfannenberg, vice
>president of the
>Mittelstand Employers' Association, which estimates that up to 60% of
>its 350 member firms now follow this pattern.
>
>Italy has, on the books at least, some of the tightest labor rules in
>Europe, even after scrapping a few years ago the scala mobile linking
>wages to inflation automatically. Rigid regulations--for example,
>holding pay levels in the impoverished south as high as in the
>prosperous north--are a key factor in the south's sky-high jobless rate.
>But experts also attribute the north's near-full employment record to
>the predominance of thousands of small firms, which are exempt from some
>of the most burdensome regulations--and, frankly, can evade others. Says
>Shonfield, "The whole Italian labor
>market is much more flexible than it appears."
>
>The hottest role model for continental Europe is the Netherlands, which
>enjoys a Britain-beating 6% jobless rate and vibrant economic growth,
>yet retains most features of a cozy welfare state and never experienced
>Britain's union-bashing turmoil during the Thatcher years. This
>remarkable success is based on a 15-year-old agreement, just two pages
>long, that triggered a far-reaching reform of the labor market. Unions,
>then represented by Wim Kok, now Prime Minister, offered wage moderation
>in return for a shorter work week, and urged the government to
>redistribute work through part-time employment and ever more flexible
>contracts. Today an estimated 37% of Dutch
>employees work part-time, the highest proportion in the industrialized
>world, and women, once under-represented, have flooded the work force.
>Unemployment benefits were trimmed from 100% to 70% of most
>recently-earned wages, and the much-abused disability system was
>reformed. The most important change was an end to the high pay
>settlements that led to the soaring unemployment of the early 1980s.
>Since then, wages have grown only 2% a year, while elsewhere in the E.U.
>they have ballooned four times as fast.
>
>But few governments have followed the Dutch example. They have avoided
>the politically risky move of lowering minimum wages, which would create
>jobs for those hit hardest by
>unemployment--the young and unskilled. Other efforts at flexibility have
>been piecemeal or half-hearted, according to a chiding report issued
>last week by the Organization for Economic Cooperation and Development.
>The oecd said a "comprehensive approach" to flexibilit labor markets
>works better, and, crucially, also minimizes political and union
>opposition, still considerable in many countries. For example, Germany's
>mighty I.G. Metal union took the Viessman boiler company to court over
>its innovative arrangement (and lost on a technicality).
>
>Some solutions create new problems. In France, the tab for the cut in
>social charges for employers is borne by taxpayers to the tune of
>$18,000 per year per job. Short-term contract reforms in France and
>Spain produced ineffective two-tiered labor markets in which the workers
>with permanent contracts continue to extract high wages. "Unemployment
>in France stems from a double fear," says economist Albert Bressand of
>the Paris think tank Promethee: "employees fear that companies will
>abuse these newer contracts and management fears taking on any new
>long-term contracts."
>
>Only a long-term commitment will solve the jobs crisis, as the
>Netherlands can attest. "People don't realize that we are now reaping
>the fruits of a process that lasted 15 years," explains Dutch Economic
>Affairs Minister Hans Wijers. Although it's not popular to say so,
>governments must realize that too much emphasis on protecting existing
>jobs conflicts with the more pressing need to create new ones.
>
>--Reported by Jordan Bonfante/Bonn, Bruce Crumley/Paris, Nina
>Planck/London and Barbara
>Smit/Amsterdam
>
>
>



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