Concerted action: who should pay for it?

Chancellor Scholz invites employers and trade unions to another top meeting, the so-called Concerted Action. The big question is: who will bear the cost of inflation and fighting the crisis?

Whether in the Bundestag, at the German Employers’ Day or after the agreement on the third relief package – Chancellor Olaf Scholz has not tired of emphasizing the importance of the so-called concerted action in the past few days.

In his view, this should primarily send a signal: politics, business and trade unions are united in the face of the crisis. It’s about cohesion and social partnership to curb the consequences of high inflation. And Scholz also has a specific suggestion: “If companies want to make special payments to their employees, we will make them tax and duty-free for up to 3,000 euros,” said Scholz on Tuesday at the employers’ day. This is support for companies that “want to do something very practical for their employees during this time.”

The thinking behind it: trade unions and employers dampen the dreaded wage-price spiral by agreeing on one-off payments rather than permanent wage increases. And so that this is worthwhile for the employees, the state waives taxes and duties. So more net from the gross.

“Light at the end of the tunnel”

The President of the German Institute for Economic Research, Marcel Fratzscher, considers this to be a good instrument in principle. “But you also have to be aware that the companies that are now hit the hardest and where the employees are also hit the hardest can’t afford it in many cases,” Fratzscher said ARD Capital Studio. Because there are now many indications of a recession and persistent inflation, with permanently high energy prices and the resulting company bankruptcies.

In this situation, the economy is lowering expectations of the concerted action. According to Employer President Rainer Dulger, the social partners could hardly curb inflation. In principle, the principle “More net from gross” is correct – especially with high inflation. However, even after three relief packages were decided, Dulger sees the federal government as primarily responsible.

“The delivery note doesn’t say enough.” According to Dulger, there must be relief for the employees and for the companies so that the energy remains affordable. “And we need answers so that there is light again at the end of the tunnel.”

Economy calls for state intervention

It is remarkable how strongly the economy is currently relying on state intervention, putting aside basic market-economy convictions. The President of Employers advocates a “Ministry for Raw Materials”, the Central Association of German Crafts calls for a price brake for natural gas. An instrument that the federal government wants to introduce on the electricity market soon – combined with the skimming off of so-called chance profits, which the economy, however, rejects.

The trade unions have been demanding noticeable market interventions in the crisis for some time. Because without a price cap, the fear is that many normal earners would quickly be overwhelmed. And in view of the inflation, the unions see little reason for wage restraint. IG Metall is currently calling for an increase of eight percent. She points out that she has repeatedly agreed to one-off payments because of the pandemic. Now it is time for permanent wage increases. The metal employers, on the other hand, consider an increase of eight percent to be “out of date”.

Trade unions and employers had already emphasized before the first meeting of the concerted action in early July that they, as collective bargaining parties, were responsible for wage agreements – and thus set clear limits on politics. Nothing has changed in this attitude, as DGB boss Yasmin Fahimi has just emphasized.

Vassiliadis: Industries affected differently

However, the most recent wage agreement for the 12,000 employees in the German North Sea ports is interesting when it comes to containing inflation. On the one hand, it provides for a significant wage increase and, on the other hand, an inflation clause, which should come into play in the coming year depending on actual inflation. The higher the inflation, the higher the wages.

The boss of the union mining, chemical, energy IGBCE, Michael Vassiliadis, refers to the ARD Capital Studio Be aware that energy prices will affect some industries and companies very differently. Some are in real distress, others would benefit or at least be in good shape. “Looking at the chemical industry, for example, you can’t say that things are going badly for them. So there’s no reason not to have a normal collective bargaining round there, too,” says Vassiliadis. You have to focus on the people who would ultimately have to cope with the cost increases.

Who bears the costs of inflation and the crisis?

Vassiliadis expects that during the concerted action, one of the things that will be discussed is how the desired energy price caps should be designed in concrete terms. From the point of view of the union boss, it is important to find a system that does not put companies under pressure and endangers production. If possible, a recession must be avoided.

Whether trade unions, business or the federal government – before the meeting in the Chancellery, everyone is faced with the same question: Who will bear the costs of inflation and the fight against the crisis? A kind of collective, concerted challenge. The joint, concerted recipe for this is not yet in sight.