A tale of two systems: many readers don't believe it

Dec. 28, 2011 — I found the discussion about the differences in labor relations in the U.S. and Germany very interesting. While the article was spot on about how the works councils smooth labor relationships in Germany, the numbers in the article gave me cause to doubt the research. I was very surprised to read that Germany produces twice as many cars as the U.S.

When I did some research, I came across this site, which put the number of cars produced at 5.4 million for Germany and 4.4 million for the U.S. 4.4 million is considerably less than 5.4 million, but a whole lot more than 2.7 million. Could you please explain where your numbers came from?

Also, I feel like the article was lacking a discussion of why it’s possible for German automakers to pay much higher wages. One possibility I would like to suggest is that all of them, except for Volkswagen (which I do not believe exports any cars at all from Germany to the U.S., or in any case very few) are luxury brands that can charge premium prices.

I wonder if a comparison between the automobile industry in France and that in the U.S. might be more instructive, since France is a high-wage country producing low- and mid-range automobiles.

— Andy Andrews, Dortmund, Germany

 Dec. 28 2011 — I think this discussion is only the tip of the iceberg. If you compare the U.S. and the German economy, it is not correct to look only to the labor rates. This discussion is also valid if you plan to move plants from Germany to China or to any other country. As you know, the Chinese car market is booming and the pressure to localize is extremely high. In fact, it is more than a labor rate discussion. You have to look to the total cost of ownership. And you have to compare the right figures (for example, cost-of-living index, real GDP, production cost, logistic cost, cost of quality failure and so on) to get some comparable figures. A discussion only based on labor rates is totally wrong and might lead in the wrong direction.

Further on, every consumer is looking for the “best deal he can get.” In fact, we like to buy cheaper products with more value-added figures. We trained the consumers since the early 1960s to follow this market rule. To follow the “more is better” approach, companies have to optimize the cost structure to sell products according to this market rule. And to organize the money to support this strategy, they have to make money to gratify the stock markets too.

I believe it’s not a union discussion we have to start with, it is more a discussion to handle our own (country) economic system.

— Guenter J. St. PLNY, Luxembourg, Luxembourg

Dec. 27, 2011 — Comparing wages in different countries is meaningless unless you compare the relative purchasing power of the wages a worker is earning. Does the German autoworker have a higher standard of living than his American counterpart, or does he have less due to higher income taxes and higher cost of goods and services? These points should be included when talking about wages earned in different countries for the same job.

— John Timoti, San Clemente, California

Dec. 27, 2011 — I think the difference is that in our northern European economies like Germany, Sweden and Holland, high skilled workers have been a bit scarce since the Second World War. So every time the economy peaked, their wages went up quickly. And because they were well organized, the companies couldn’t fire [skilled workers] easily when the economy declined. People feel like their company is family, and are very motivated and proud to work. They become “part of the ship, part of the crew.”

Companies had to become flexible in production, so where the wages were highest and the workforce inflexible, you built the most expensive robots and car production sites. [These means] were and are cheaper than using more personnel. When you know that after 10 years it will be very expensive to fire a [much-needed] worker, as a company you will invest in that worker so that he or she will last for 40 years. In the U.S., personnel is much cheaper and there is less need to invest in workers. Each employee [can be discharged on] two-weeks notice, so if he isn’t up to the job, you [fire him] and take another. That means that the relationship between a European company and its worker is much different than in the U.S.

In the U.S. the relation between the work force and companies is [workers] hope the companies sell enough so that they keep their jobs.

In Europe workers and companies have to invest in each other to keep the relationship working for a longer period. If the worker doesn’t perform, doesn’t learn, or doesn’t follow the rules the company and the workers have made, he or she will lose a secure, well-paid job. With enough “points” against one, [a company] can get rid of a worker cheaply. The company also has to invest in workers to keep them productive — and we have a higher productivity than in the U.S.

The real problem in our economies is that we are in the world to produce and have too many people. [Fewer] people can produce everything we need, so there is no use for the other people to work. If there are too many people, wages go down. [Since] the rich — the leaders of companies and countries — can afford a big personal workforce, there will be no honest division of wealth.

In the future, we must work less so that we can divide the work over [a greater number of] people. [Increase] per hour production and work [fewer] hours, and our personal and family lives will flourish.

Of course we have to keep the birhtrate under 1.8 child per woman. Only then will the workforce decrease fast enough [in the face of an] increase in productivity.

There is a simple mechanism to reach this goal. Give all the women in the world a good education and bring wealth to more people, [rather than] concentrating it in a few [individuals].

— Jean-Paul Sosef, Rotterdam, Holland