Can Germany Reform American Labor Relations?
German labor struck back swiftly after the American workers rejected VW’s proposition. Two days later, Bernd Osterloh, chair of VW’s works council and a member of the company’s supervisory board, threatened to block any further investments in the American South if the workers were not able to unionize. “I can imagine fairly well,” Osterloh said, “that another VW factory in the United States, provided that one more should still be set up there, does not necessarily have to be assigned to the South again.” That might give pause to those right-wing Americans promoting union-free factories. What if the foreign investors insist upon having one?
“Osterloh’s threat is not idle,” says Stephen Silvia of American University, an authority on the German economy and its very different operating culture. “Investment decisions need to be run by the works council, and if the council says no, it makes it difficult for the company to ignore it.”
So Germany may have more influence on America’s future development than Southern politicians realize. And VW’s deal with the UAW can change the larger landscape for social reform in the global marketplace (the UAW vows to try again). If a union and works council are established at VW, then IG Metall can pressure the other German car companies—Daimler (which owns Mercedes) and BMW—to do the same at their transplants. Japanese manufacturers are a different case, but they too will feel pressured to change. For that matter, so will other US companies and unions. If workers in Tennessee can elect representatives to talk directly with management, why can’t General Electric workers in Connecticut? Or mill workers in South Carolina?
In these ways, social values can reinforce sound business practice. Silvia explains: “In Germany, the workplaces are able to function with much more flexibility through the works council. Things can just be worked out through a dialogue. But the biggest reason VW has worked out a lot of decisions about where they are locating factories with the works council people is it really helped them keep the peace within the company. It provides voice and encourages relations.”
Many US managers are not much interested in “relations,” at least not with lower-level employees. In the Chattanooga situation, top German managers were fine with the reforms, Silvia observes. “It’s the lower-level managers—American good ol’ boys who are anti-union—who really worked against the agreement. They saw the works council as a threat to their authoritarian management. They’re used to having their way, no questions asked by any workers.”
But how did Germany develop this different perspective on labor relations, which is so contrary to the American stereotype of stern Germanic commanders? Silvia provides the answer: “Because World War II happened.” Never again, the Germans told themselves. “The Nazis were seen as an excess of ideological extremism, and one of the ways to deal with that is to end this nasty class conflict and try to make a society where everyone can participate and everyone is given a share,” he adds. “Capitalism can’t just be brutal. It has to be inclusive, because if it’s not, those people are going to organize themselves in revolutionary or reactionary parties.”
Germans might say that America has not yet absorbed the social lesson. Perhaps the labor skirmish in Tennessee can become a teaching opportunity, a chance for Americans to examine other approaches, like Germany’s “social market” capitalism, and provoke a more energetic discussion of our possibilities. For now, US politics seems motionless, unimaginative and self-absorbed. Retrograde Republicans react predictably, but where is the so-called party of working people? Democrats remain silent, when they could be rallying support for the bold reform that Volkswagen and the UAW are seeking.
“The United States has to think about providing that German-style relationship,” Silvia says wishfully. “If you could just get the people out of their trenches and start to interact.” He does not sound especially confident.
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