Well, well, this was hardly unexpected. In fact the reality may well be that this time there is plenty of smoke but no fire, since Siemens has announced it has no concrete plans to move 10,000 jobs abroad. Indeed much of the noise at present may emanate from a threat to move as a negotiating posture in order to try and force changes. But behind this the underlying reality is that the problem is coming. Not only is Germany having a ‘job-loss’ recovery there is good reason to doubt whether it is having a recovery at all. And of course the main course may well be yet to be served since many of the jobs threatening to relocate seem to be in the industrial sector, whilst just round the corner the high-end services issue is surely coming. Still there is one difference with the US: the headlines are not being made by an opposition candidate talking about Benedict Arnold CEO’s, but by a Chamber of Commerce head who seems to be saying he’s Benedict Arnold and proud of it.
Unpatriotic or economically imperative? The uncompetitively high cost of labour in Germany is fast becoming a source of friction between business leaders and the government in the eurozone’s biggest economy.
Companies argue their only choice is to move jobs abroad, a solution which is set to become easier with the imminent eastwards expansion of Europe.
But Chancellor Gerhard Schroeder, fearing a mass exodus of jobs to low-wage countries at a time when German unemployment is already cripplingly high, has roundly slammed such deliberations as “unpatriotic”.
The debate seems to have hotted up in recent weeks, with companies, particularly in the high-tech sector, apparently mulling plans to relocate thousands of jobs abroad.
The powerful metalworking union IG Metall said that the electronics giant Siemens was considering relocating up to 10,000 jobs in its mobile and fixed telephony divisions and its automatisation, energy and transport businesses in order to cut labour costs.
Corresponding plans had been submitted to employee representatives in the activities concerned in recent weeks, the union said.
But it is not only the IT sector — which is estimated to have lost around 70,000 jobs last year — that is following the call of lower costs abroad.
The airline Lufthansa is to move large parts of its accounting department and its purchasing activities to Poland and car maker Volkswagen already builds around 13 percent of its vehicles in central and eastern Europe.
And the VCI chemicals industry association found that while the domestic research and development (R and D) budgets of its members were set to stagnate this year, the companies were planning to increase their R and D spending outside Germany.
The DIHK federation of chambers of commerce poured oil on the fire of the controversy this week by appearing to throw its weight behind some sort of campaign for companies to turn their backs on Germany.
DIHK President Ludwig Georg Braun advised companies “not to wait for better policies, but to act and take advantage of the opportunities offered” by the eastward expansion of Europe.
The comments immediately drew fire from the government, currently battling to bring down the chronically high level of unemployment in Germany.
Schroeder slammed the remarks as “unpatriotic”. And the new secretary general of Schroeder’s Social Democratic SPD party, Klaus Uwe Benneter, was similarly enraged.
“When industry leaders talk down Germany as an economic site in such a way, they’re acting irresponsibly,” he fumed.
Even the opposition CDU party was up in arms, with the head of the CDU’s social committee, Hermann-Josef Arentz, attacking Braun’s comments as “bare-faced cheek”.
But business leaders insist they have no choice.
The head of the BDI industry federation Michael Rogowski said moving production out of Germany was the only way companies could remain competitive and “secure those jobs that are left in Germany.”
High-tech companies such as the software giant SAP agreed.
“If we don’t move, then we can’t be competitive. We lose market share and then we lose part of the jobs in Germany as a result,” SAP chairman Henning Kagermann said in an interview with Financial Times Deutschland.
It was “an economic imperative” to move to low-wage countries.
The head of Siemens’ fixed-networks division ICN, Thomas Ganswindt, said that by moving activities abroad, “we’re following the markets. Globalisation means that we create value where there is demand for it, that is to say, where there is growth. At the moment, growth is taking place elsewhere.”
The attractions of relocating are clear — an IT employee in India, for example, earns around a third of the amount his German counterpart takes home.
But that was not the only problem. The head of IBM Germany, Walter Raizner, pointed the finger at Germany’s inflexible labour market laws.
Countries that had changed their laws were now closer to full employment than Germany was, Raizner said.
And DIHK President Braun rejected the allegation he was unpatriotic.
“True corporate patriotism lies in pushing for consistent policies of reform,” he argued.
Source Yahoo News