Erhard's Warning
From SARAH GAINHAM
BONN
'WARD'S television appearance last week was
E
out of the character he has built for himself in the eyes of the German public, and therefore caused something of a shock. Without his cigar and his round, jolly smile he did not seem the same; it might almost have been the Father Figure himself saying that the situation `had never been so serious.' When Adenauer says it, it is comforting somehow, like Dad's con- stantly repeated 'You'll have me in Queer Street with your extravagance,' but from Erhard ex- hortations to work hard and be good and he will take care of everything else are the usual line and his unwonted sternnpss.combined with the yearly crop of trade union pay demands had anything but a comforting effect. Nothing could be further from the truth than the notion foreigners have that Germans are all dour and stolid; the most hysterical people in Europe and the least confident in the lasting stability of the currency, they started to sell stocks and shares and the stock markets showed large drops in every de- partment by Friday. The general trend is shown by the widespread selling by small investors.
The pay demands happen every year for the simple reason that the agreements made by the unions with their employers last for one year. But there is a difference this year. As the Socialists' economics spokesman Dr. Heinrich Deist said correctly, wages in Federal Germany were just reaching French and .Belgian levels, 'and though they had risen very fast in recent Years, they had had much further to go. He also said, and it is true again, that the relation of productivity to wages is still healthy. The rela- tion is still there but it is not quite healthy. The SPD's own chart of wages and productivity increases shows the productivity rise lagging around an average 4 per cent. while wage rises have been an average 7-8 per cent. in the last five years. Last year wages rose over 10 per cent. and will show a similar rise this year when all the bargaining is done. As Socialist Deist said, these rises, though great, have not reached British or American levels •yet. And that is the Point Erhard is trying to make, though he was too tactful even to imply it himself: the dis- proportion paid to themselves by the British against what they produce is precisely what he wants to avoid happening here. Moreover, the wage tariffs are misleading; sometimes very mis- leading. Generally wages are higher than the tariff rates, and for specialists of every sort they are very much higher. And to keep specialists, firms from hairdressers to Krupps have to pay out large sums in real incentives such as subsidised housing, works cars, medical care, subsidised canteens, time privileges (extra holidays, shopping time, etc.) and many other things which go on the bill somewhere.if not on the wages bill. At this the Socialists say two things. The prices of food and household needs are far too high and show too great profit mar- gins, both in their manufacture and their selling, wholesale and retail. Food prices should be re- duced and then real wages would be higher. Then, they say, the classes that have lost, as Erhard said, their feeling for what is possible are not the workers and employees but the manag- ing and commercial classes with their huge profits and fabulous extravagance. Control the incomes of this new-rich upper-middle class, and the workers will be more reasonable. The em- ployers' federations on the other hand seem to want some sort of outside body to arbitrate wage claims which have up to now been bar- gained out directly between the unions and the masters. So both of these suggestions in dif- ferent ways wish to put chains on Erhard's free market, which has produced the economic miracle.
Two factors come into the situation which are new. The new strong competition from Com- mon Market partners inside the Federal Re- public makes it impossible for manufacturers to pass on any further increase in costs to the consumer; prices cannot now go up without the home market increasingly buying •Italian or Dutch goods instead of German. Given the wage bargains being made now, and given the overemployment which is universal here, costs must rise, and will therefore have to be carried by the producers. There is some truth in the assertion that the managing class can cut its profits; but the obvious and crass extravagance of this class (often, too, in 'appalling taste) is not such a big factor as it looks to the public, and it is the incentive to enterprise contained in these large fortunes that are being made which gave the push to the whole movement of the German economy. A further large factor is the drying-up of the flow of new labour, including some highly- skilled labour, from East Germany. This is usually played down because it sounds so in- humane towards the inhabitants of the Soviet Zone, but it is a powerful factor. Not only that the unions have a weapon in the now inexpansive labour market. Further increases in production must be achieved by new automation, rationali- sation, mechanical packing and transporting devices and so on; many firms that are doing well now will not be able to undertake this large capital investment and pay much increased wages for shorter hours. A factor in this capital expenditure which is considerable but not crucial is that large sums 'salted back into the business' by the Erhard tax system have been used in the last few years to provide some of these extra incentives and are not now available to install new machinery. A firm, for instance, that has built lovely villas and bought motor- cars for its designer, sales chief and managing director, has used funds to keep its key men that are now needed for essential machinery to replace the little girls from Leipzig and East Berlin who used to do the packing for the first year or so of their new lives in West Germany.
What Erhard wanted to do was to warn people; and, as he said, the 'social partners'— which is the German phrase for the worker- employer complex—are not the only classes in society and have made disproportionate gains compared with other equally valuable classes in the last few years. He was warning them that a real barrier had been reached in costs.
It is hard for the unions, and for the em- ployers, to grasp this fact, from their opposite but similar standpoints. The unions' wage de- mands and the general large rise in wages were the moral debt owed to the workmen of Ger- many who worked long and lived hard in the bad days, and, though with many a sigh, the employers knew that and have paid up. Every year they raised a frightful howl, and every year they paid up, knowing they could and they had to. But now a limit is in sight. Erhard's concern is that the limit should be recognised before it is actually overstepped. The last time Erhard sounded stern and serious, it was a pre- lude to the up-valuation of the Mark; the export market will probably prevent a further brake in that direction, but if his warnings are not heeded, Erhard will have to make some move.
Previous page
