View from City Road: Barricades go up in east Germany

After three weeks of preparatory skirmishes, the decision yesterday by Germany's most powerful union, IG Metall, to hold a full strike ballot in the east between 26 and 28 April shows how industrial confrontation can develop its own unreal dynamic. The union leadership knows full well that a majority of firms in the metal and engineering sectors of eastern Germany's never-never-land economy are surviving only thanks to massive state transfusions. For many of the rest, which are making a go of it on their own, an obligation to pay now a 26 per cent wage rise, followed by another 30 per cent next year, as agreed in the 1991 contract on staged wage equalisation with the west, would result in countless factory gates swinging shut.

Manufacturing output in the east fell 15 per cent in January from December. The drop in capital equipment production was 28 per cent. In such a miserable industrial climate, with real unemployment in the east running at 35 per cent according to the Federal Statistics Office, conditions are hardly conducive to a show of shop-floor strength.

Other unions, in the eastern chemical and construction sectors, have already accepted the 9 per cent wage increase the metal and engineering employers are also offering. The reason for IG Metall's seemingly suicidal determination to mount the barricades lies in its alarm that it might set a historic precedent.

If employers can unilaterally tear up a binding sectoral wage accord once, as they have done for the first time with the wage equalisation contract, then they could do so again.

Both sides perceive the stakes as unusually high, which suggests that there will be lots more sound and fury before the dispute is resolved. A compromise solution, however, which somehow preserves the principle of a sectoral contract while substantially altering its content, remains a likely outcome. Employers and unions alike realise it is in neither's interest to see a complete breakdown of the bargaining system that has served Germany so well.

Opening the way to individual firm bargaining would severely undermine union influence, while for employers it raises the prospect of the dreaded 'English conditions'.