Organized Labor Resurgence and Calm in Europe

3 Mins read

Organized labor has made a strong comeback to the forefront of the U.S. conversation, with the successful strikes by the United Auto Workers and Hollywood writers and actors. However, it is a different story in Europe, the motherland of labor unrest, where an eerie calm prevails.

The year 2023 started on a high note, with strike activity in the United Kingdom reaching a post-Margaret Thatcher peak in February. Germany also made headlines with a one-day “megastrike” in March. As the summer travel season approached, transportation unions caused havoc across the continent.

But now, autumn has brought about a sense of tranquility. According to Nina Skero, CEO of U.K.-based consultant Cebr, “The storm has passed for now.”

One of the reasons for this calm is that the winter-spring labor actions yielded positive results. German postal workers secured an average 11.5% pay increase in March, and U.K. teachers settled for 6.5% in July. These successes have had a ripple effect on economies. In fact, U.K. wage hikes are currently running at an impressive 7% to 8%, as reported by Hannah Slaughter, senior economist at the Resolution Foundation in London.

In addition to the labor victories, governments have taken direct action to protect citizens from inflation. Germany allocated 2% of gross domestic product to subsidize energy costs in 2022, while France and Italy each contributed 1%, as estimated by the European Commission. The U.K. has also raised its minimum wage by a significant 45% since 2016, now amounting to 10.42 pounds sterling ($12.81) per hour.

The macroeconomic climate in Europe has also undergone a significant change. Inflation, one of the major drivers behind the strikes, has fallen from 10% to 3% in the euro area over the past year. Similarly, the U.K. rate has decreased from 11% to below 7%.

As attention shifts to the prospect of a forthcoming recession, Eoin Drea, senior researcher at the Wilfried Martens Centre for European Studies, predicts that most of Europe will be grappling with it by early next year. “Both employers and unions are concerned about what lies ahead in the winter,” he explains. “This has dampened expectations.”

In conclusion, organized labor in Europe has experienced a resurgence followed by a period of relative calm. The successes achieved through labor actions, combined with government initiatives to curb inflation, have contributed to this lull. However, as the threat of recession looms, both employers and unions are apprehensive about the challenges that lie ahead.

The Changing Landscape of European Labor Unions

Germany, the home of Europe’s premier private-sector union IG Metall, has been facing challenges in recent years. The country’s GDP has shrunk in three of the past six quarters, mainly due to the cutoff of cheap Russian natural gas and increasing competition from China in the electric vehicle industry.

Taking over as IG Metall’s first female boss, Christiane Benner has adopted a defensive approach. Rather than confronting the bosses directly, she is lobbying the government to put a stop to the “creeping dismantling of industry and jobs.”

In contrast, French unions have been more focused on protesting against President Emmanuel Macron’s plan to raise the pension age. Although Macron managed to push through the reform without their approval, the demonstrations have not led to widespread industrial action. Similarly, Italy, known for its strikes, has been relatively calm this year in terms of labor market issues.

However, the long-term outlook for organized labor in Europe seems challenging. Strikes this year have primarily occurred in the public sector, while private-sector unions face similar difficulties as their counterparts in the United States. These include outsourcing, gig work, and declining membership. Kurt Vandaele, a senior researcher at the European Trade Union Institute, explains that with the rise of temporary contracts and decreasing political support, the future doesn’t look very optimistic.

Nonetheless, IG Metall’s Benner is not ready to give up just yet. She has issued a warning to Elon Musk and Tesla, as the company ramps up production at its gigafactory near Berlin. In a Bloomberg interview, she cautioned Musk to be mindful of the “different rules of the game” in Germany. While Musk did not respond directly, he did grant a generous 4% raise to his German workers.

Despite the challenges faced by European labor unions, organizations like IG Metall continue to fight for their members and adapt to the changing landscape.

Related posts

Government Matching Contribution for Retirement Savings

2 Mins read
According to researchers, nearly 22 million Americans are set to benefit from a new government matching contribution initiative aimed at enhancing retirement…

Oil Market Update

1 Mins read
Oil Market Update On Tuesday, crude oil futures prices were lower, while refined product contracts were experiencing a second consecutive day of…

Carrier Global Sells Industrial Fire Business

1 Mins read
Carrier Global Sells Industrial Fire Business for $1.425 Billion Carrier Global has announced the sale of its industrial fire business to private-equity…

Leave a Reply

Your email address will not be published. Required fields are marked *