A tale of two systems

Gary Casteel, the Region 8 director of the UAW, the region covering the whole southeast of the country, acknowledged the creation of “Tier 2” as “concessionary,” and said, “It’s never attractive to not have equal pay for equal work, but when you’ve got Nissan hiring in Mississippi for $12.50…and Volkswagen for $14…how are we going to maintain a wage level when our competition is doing this?”

The counter-example in Germany

Workers in the German auto industry maintain high wages and good working conditions through two overlapping sets of institutions. First, in the auto industry, virtually all workers are unionized members of IG Metall, the German autoworkers’ union. With such union density, workers have considerable power to keep wages high. German autoworkers have the right to strike, but as Horst Mund, head of the International Department of IG Metall explained to Remapping Debate, they “hardly use it, because there is an elaborate system of conflict resolution that regularly is used to come to some sort of compromise that is acceptable to all parties.”

In addition to high trade union density supporting the power of German autoworkers’ wages, the German constitution itself includes a second mechanism for keeping employees involved in the decisions of the firm for which they work. The Works Constitution Act provides for the creation of Works Councils in each factory. The Works Councils provide a mechanism through which a company’s management must work with employees, whether they are in a union or not, on issues affecting work life, such as shop floor conditions, scheduling shifts, and other issues particular to the factory. This system, according to Mund, institutionalized “direct contact for workers’ representatives with management at various levels, from lower to middle to senior management in daily affairs. So you exercise some kind of dialogue where you don’t always wear your management pin or your union pin.”

Mund points out that the German example goes “against all mainstream wisdom of the neo-liberals. We have strong unions, we have strong social security systems, we have high wages. So, if I believed what the neo-liberals are arguing, we would have to be bankrupt, but apparently this is not the case. Despite high wages…despite our possibility to influence companies, the economy is working well in Germany.”

Are German unions nice and American unions nasty?

Mund says “there are strong contradictions between the way companies that…are used to dealing with unions in Germany, behave differently when they go elsewhere, not only in the U.S., but also in other countries.” What accounts for the differences?

Michael Maibach, president and chief executive officer of the European American Business Council, described this apparent difference by saying that union-management relations in the U.S. were “adversarial” as opposed to the “collaborative” German model. J. Ed Marston, a spokesperson for the Chattanooga Area Chamber of Commerce, likewise told Remapping Debate that “Workers councils in Germany promote cooperation between workers and managers and they deliver value and they continue to thrive…Compared to UAW, where there is an adversarial relationship.”

According to Mund, however, “The accusation that American unions are more radical and destructive…definitely has to do with the hostile environment in which the unions have to act. How can they be constructive and friendly if their asses are kicked all the time?” Mund sees the lauding of “cooperation” in the German context as profoundly misleading, saying “they would not talk to us either if they had the choice.”

Mund emphasized the importance of the trade union and works councils in maintaining workers’ participation and high levels of remuneration, and said that the focus was not to maintain the good will of individual firms. He said, “Companies in Germany, while they are bound by law to work with us in works councils, and we are present on supervisory boards, they just have to do this. For most of the companies, not for all, it is not something they would do if they were not forced to do that. The companies are there to make profit, and in the eyes of many managers we are not conducive to making as much profit as possible, but rather a hindrance.”

“Because they can get away with it”

Marko Maunula, a historian and author of the book, Guten Tag, Y’All: Globalization and the South Carolina Piedmont, 1950-2000, told Remapping Debate that foreign-based manufacturers like BMW “are very cognizant of the political climate of communities,” and they behave differently depending on the legal and social context within which they find themselves. Globalization over the last 20 or 30 years, Maunula suggests, has resulted in a situation where “there is no real industrial nationality anymore.” Though “BMW is a German company and it has a very German hierarchy and management system in Germany…when they are operating in Spartanburg they have become very, very easily adaptable to Spartanburg business culture.”

Coming from a very different perspective, Maibach told a very similar story: unlike in Germany, where unionization and high wages are normalized by law and custom, “the U.S. has a different tradition” and “companies have a choice to make” about where to locate their facilities, often deciding on places where the risk of unionization is lower.

Mund relates the initial perplexity of his American counterparts in response to the anti-union stance taken by German automakers in the U.S.: “In the past we frequently had the impression that our American colleagues thought we would just have to talk to management here in Germany in the sense that ‘look, behave decently, you know us, we’re the good guys, our American colleagues from the UAW they are equally good, so behave mutually and everything will be fine.’”

“But,” Mund said with understatement, “It is not working like this.”