Pay day looks over for German fat cats

PUBLISHED : Sunday, 30 December, 2007, 12:00am
UPDATED : Sunday, 30 December, 2007, 12:00am

Olli the postman makes his rounds on these bitter cold winter days in Berlin. But he's not just delivering letters - he's also on the front line of a struggle for greater social justice amid Germany's rapidly widening gap between rich and poor.

Several troubling socio-economic trends have been simmering below the surface of the country's seemingly placid society for a few years. But it's the German government's recent decision to implement a minimum wage for letter carriers that has helped spark a full-blown national debate about greedy executives and exploited workers in the age of globalisation.

'I was quite pleased they pushed through the minimum wage - it works in other European countries so it should work here too,' says Olli, a friendly and articulate man in his fifties who rolls his own cigarettes.

German society, once known for its cohesion, consensus-oriented labour ties and general economic equality, in recent years has begun drifting apart. At one end are the captains of industry, raking in massive salaries and bonuses even as their companies flounder or make people redundant. And at the other are the growing legions of working poor, struggling to make it to the next pay cheque and finding their employers are squeezing labour costs by offering fewer benefits, lower wages and limited job contracts.

'Morale at the Post is bad right now; they just keep trying to get more and more out of their people,' Olli says between puffs on his smoke. 'My private life is ruined. I work 50 to 60 hours a week and never have two days off at a time.'

Standing in front of his bright yellow trolley filled with letters and packages, he asks not to be identified by his surname since his employer, Deutsche Post, has forbidden letter carriers from talking to the press. The company, a postal and logistics behemoth partially owned by the government, is all too aware of the heated public discussion surrounding the minimum wage decision, as well as the poorly timed sale of stock options worth millions of euros by Deutsche Post chief executive Klaus Zumwinkel.

This month, the ruling coalition agreed - amid the strong backing of Mr Zumwinkel and against the loud protests of Deutsche Post's considerably smaller private competitors - to set a minimum wage of Euro8 to Euro9.80 (HK$91 to HK$111) per hour for postal workers. One of the private companies, the Pin Group, immediately announced it would sack 1,000 workers and could eventually have to file for insolvency. Another, TNT Post, said it would no longer try to deliver letters for private customers since it would not make economic sense with the legislated minimum wage.

But the prospect of the competition being forced out of business due to higher labour costs caused Deutsche Post's shares to surge higher on the stock market and - in a spectacular lapse of judgment - Mr Zumwinkel promptly cashed in stock options for a private Euro2 million windfall.

The ensuing public outrage caused a suitably chastened Mr Zumwinkel to admit he'd made a mistake in a Deutsche Post employee newsletter, but by then there was no getting the genie back into the bottle.

Over the past few weeks, Germany's top managers and executives have faced an unprecedented scrutiny of their pay packets. Some politicians have even started discussing the feasibility of salary caps for chief executives to complement a nationally mandated minimum wage for all business sectors.

While a recent survey by pollster Forsa found that about 70 per cent of Germans would support limiting what managers can earn in the world's third-largest economy, Chancellor Angela Merkel and others have dismissed trying to legislate salaries of chief executives as being both blatant populism and highly unrealistic. But Germany's leaders are clearly concerned by what they see as 'Americanisation' of German society, as the rich-poor gap in what used to be a rather egalitarian country begins to grow at an alarming pace.

Dr Merkel told her conservative Christian Democratic Union on December 3: 'Just because an American car executive makes a thousand times what his workers earn, it seems to mean that the head of a German car company should now receive a pay increase that he would never grant to his workers.' It was a clear reference to the near Euro60 million that Wendelin Wiedeking, chief executive of luxury German carmaker Porsche, is expected to make this year.

Mr Wiedeking has defended his hefty compensation by pointing out that unlike some German executives who have in recent years pocketed large termination packages even as their companies floundered, Porsche is enjoying unparalleled success. But such attitudes find little resonance throughout much of the country, where the concepts of solidarity and sozialgerechtigkeit - social justice or fairness - are held in high regard.

That's partly why Germany doesn't already have a national minimum wage like other leading industrial countries considered to be much more competitive societies, such as the United States and Britain. For decades, consensus-oriented labour relations between employers and the country's strong trade unions made such lower wage limits unnecessary. But evidence is mounting that Germany is now heading down the path towards Anglo-Saxon levels of income inequality.

Markus Grabka from the German Institute for Economic Research in Berlin detailed findings in the newsmagazine Der Spiegel last week: the richest 10 per cent of the German population saw their net income increase 31 per cent last year while the poorest 10 per cent experienced a 13 per cent decrease. Although the rich-poor gap was widening in advanced economies, he called the speed at which German society was drifting apart 'frightening'.

And those figures are backed up by another poll showing a growing number of Germans feel the country's wealth isn't equitably distributed despite the economy growing at a healthy clip (an estimated 2.6 per cent this year) and the once stubbornly high unemployment falling. An annual survey released on December 10 by the Bertelsmann Foundation found that only 15 per cent of respondents - a new low and down from 28 per cent last year - believed what people earned and owned was fairly spread among the citizens. Certainly, the new minimum wage for postal workers isn't likely to change such bleak views any time soon, even if it eventually paves the way for similar wage deals in other sectors. All it takes is a chief executive like Deutsche Post's Mr Zumwinkel to personally cash in big when they're supposedly fighting for a better deal for their workers and the damage to public opinion is done.

'It's absurd. I don't care what kind of work they're doing - nobody can be worth that much,' Olli the postman says about his boss before stubbing out his cigarette and continuing his rounds.